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STATE OF VERMONT
AGENCY OF HUMAN SERVICES
DIVISION OF RATE SETTING
METHODS, STANDARDS AND PRINCIPLES FOR
ESTABLISHING MEDICAID PAYMENT RATES
FOR LONG-TERM CARE FACILITIES
MARCH 2015
Emergency Rule
April 2020
{Additions to the existing rule are underlined and removals stricken.}
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -i- DIVISION OF RATE SETTING
TABLE OF CONTENTS
Cite as Vermont Division of Rate Setting Rules (V.D.R.S.R.)
1 GENERAL PROVISIONS ................................................................................................... 1
1.1 Purpose ............................................................................................................................................. 1 1.2 Scope ................................................................................................................................................ 1 1.3 Authority .......................................................................................................................................... 1 1.4 General Description of the Rate Setting System .............................................................................. 1 1.5 Requirements for Participation in Medicaid Program ...................................................................... 1 1.6 Responsibilities of Owners............................................................................................................... 2 1.7 Duties of the Owner ......................................................................................................................... 2 1.8 Powers and Duties of the Division and the Director ........................................................................ 2 1.9 Powers and Duties of the Department of Disabilities, Aging and Independent Living’s Division of
Licensing and Protection as Regards Reimbursement ............................................................................... 3 1.10 Computation of and Enlargement of Time; Filing and Service of Documents............................ 3 1.11 Representation in All Matters before the Division ...................................................................... 4 1.12 Severability .................................................................................................................................. 4 1.13 Effective Date .............................................................................................................................. 4
2 ACCOUNTING REQUIREMENTS ................................................................................... 4
2.1 Accounting Principles ...................................................................................................................... 4 2.2 Procurement Standards ..................................................................................................................... 5 2.3 Cost Allocation Plans and Changes in Accounting Principles ......................................................... 5 2.4 Substance Over Form ....................................................................................................................... 6 2.5 Record Keeping and Retention of Records ...................................................................................... 6
3 FINANCIAL REPORTING ................................................................................................. 6
3.1 [Repealed] ........................................................................................................................................ 6 3.2 Uniform Cost Reports ...................................................................................................................... 6 3.3 Adequacy and Timeliness of Filing.................................................................................................. 7 3.4 Review of Cost Reports by Division ................................................................................................ 8 3.5 Settlement of Cost Reports ............................................................................................................... 8
4 DETERMINATION OF ALLOWABLE COSTS FOR NURSING FACILITIES .......... 9
4.1 Provider Reimbursement Manual and GAAP .................................................................................. 9 4.2 General Cost Principles .................................................................................................................... 9 4.3 Non-Recurring Costs .......................................................................................................................10 4.4 Interest Expense ..............................................................................................................................10 4.5 Basis of Property, Plant and Equipment ..........................................................................................12 4.6 Depreciation and Amortization of Property, Plant and Equipment .................................................13 4.7 Change in Ownership of Depreciable Assets - Sales of Facilities ...................................................13 4.8 [Repealed] .......................................................................................................................................15 4.9 Leasing Arrangements for Property, Plant and Equipment .............................................................15 4.10 Funding of Depreciation .............................................................................................................15 4.11 Adjustments for Large Asset Acquisitions and Changes of Ownership .....................................16 4.12 [Repealed] ..................................................................................................................................16 4.13 Advertising Expenses .................................................................................................................17 4.14 Barber and Beauty Service Costs ...............................................................................................17 4.15 Bad Debt, Charity and Courtesy Allowances .............................................................................17 4.16 Child Day Care ...........................................................................................................................17 4.17 Community Service Activities ...................................................................................................17 4.18 Dental Services ...........................................................................................................................17 4.19 Legal Costs .................................................................................................................................17 4.20 Litigation and Settlement Costs ..................................................................................................17
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -ii- DIVISION OF RATE SETTING
4.21 Motor Vehicle Allowance ..........................................................................................................18 4.22 Non-Competition Agreement Costs ...........................................................................................18 4.23 Compensation of Owners, Operators, or their Relatives ............................................................18 4.24 Management Fees and Home Office Costs ................................................................................18 4.25 Membership Dues .......................................................................................................................18 4.26 Post-Retirement Benefits ............................................................................................................19 4.27 Public Relations ..........................................................................................................................19 4.28 Related Party ..............................................................................................................................19 4.29 Revenues ....................................................................................................................................19 4.30 Travel/Entertainment Costs ........................................................................................................19 4.31 Transportation Costs ...................................................................................................................19 4.32 Services Directly Billable ...........................................................................................................19
5 REIMBURSEMENT STANDARDS ................................................................................. 19
5.1 Prospective Case-Mix Reimbursement System ...............................................................................19 5.2 Retroactive Adjustments to Prospective Rates ................................................................................20 5.3 Lower of Rate or Charges ...............................................................................................................20 5.4 Interim Rates ...................................................................................................................................21 5.5 Upper Payment Limits ....................................................................................................................21 5.6 Base Year ........................................................................................................................................21 5.7 Occupancy Level .............................................................................................................................21 5.8 Inflation Factors ..............................................................................................................................22 5.9 Costs for New Facilities ..................................................................................................................22 5.10 Costs for Terminating Facilities .................................................................................................23
6 BASE YEAR COST CATEGORIES FOR NURSING FACILITIES ............................ 23
6.1 General ............................................................................................................................................23 6.2 Nursing Care Costs .........................................................................................................................23 6.3 Resident Care Costs ........................................................................................................................24 6.4 Indirect Costs ..................................................................................................................................24 6.5 Director of Nursing .........................................................................................................................24 6.6 Property and Related .......................................................................................................................24 6.7 Ancillaries .......................................................................................................................................25
7 CALCULATION OF COSTS, LIMITS AND RATE COMPONENTS FOR NURSING
FACILITIES ...................................................................................................................... 25
7.1 Calculation of Per Diem Costs ........................................................................................................25 7.2 Nursing Care Component ................................................................................................................26 7.3 Resident Care Base Year Rate ........................................................................................................27 7.4 Indirect Base Year Rate...................................................................................................................27 7.5 Director of Nursing Base Year Rate................................................................................................28 7.6 Ancillary Services Rate ...................................................................................................................28 7.7 Property and Related Per Diem .......................................................................................................28 7.8 Limits Final .....................................................................................................................................28
8 ADJUSTMENTS TO RATES ............................................................................................ 29
8.1 Change in Services ..........................................................................................................................29 8.2 Change in Law ................................................................................................................................29 8.3 Facilities in Receivership ................................................................................................................29 8.4 Efficiency Measures ........................................................................................................................29 8.5 Interest Rates ...................................................................................................................................29 8.6 Emergencies and Unforeseeable Circumstances .............................................................................29 8.7 Procedures and Requirements for Rate Adjustments ......................................................................30 8.8 Limitation on Availability of Rate Adjustments .............................................................................31
9 PRIVATE NURSING FACILITY AND STATE NURSING FACILITY RATES ........ 31
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -iii- DIVISION OF RATE SETTING
9.1 Nursing Facility Rate Components .................................................................................................31 9.2 Calculation of the Total Rate ..........................................................................................................31 9.3 Updating Rates for a Change in the Average Case-Mix Score .......................................................31 9.4 State Nursing Facilities ...................................................................................................................31 9.5 Quality Incentives ...........................................................................................................................32
10 EXTRAORDINARY FINANCIAL RELIEF ................................................................... 33
10.1 Objective ....................................................................................................................................33 10.2 Nature of the Relief ....................................................................................................................33 10.3 Criteria to be Considered by the Division ..................................................................................33 10.4 Procedure for Application ..........................................................................................................34
11 PAYMENT FOR OUT-OF-STATE PROVIDERS .......................................................... 34
11.1 Long-Term Care Facilities Other Than Rehabilitation Centers ..................................................34 11.2 Rehabilitation Centers ................................................................................................................34 11.3 Pediatric Care .............................................................................................................................34
12 RATES FOR ICF/MRS ...................................................................................................... 34
12.1 Reasonable Cost Reimbursement ...............................................................................................34 12.2 Application of these Rules to ICF/MRS .................................................................................3435
13 RATES FOR SWING BEDS AND OTHER LONG-TERM CARE SERVICES IN
HOSPITALS ...................................................................................................................3435
14 SPECIAL RATES FOR CERTAIN INDIVIDUAL RESIDENTS .................................. 35
14.1 Availability of Special Rates for Individuals with Unique Physical Conditions ........................35 14.2 Special Rates for Certain Former Patients of the Vermont State Hospital .................................36 14.3 Special Rates for Medicaid Eligible Furloughees of the Department of Corrections .................36
15 ADMINISTRATIVE REVIEW AND APPEALS............................................................. 36
15.1 Draft Findings and Decisions .....................................................................................................36 15.2 Request for an Informal Conference on Draft Findings and Decisions ......................................37 15.3 Request for Reconsideration .......................................................................................................37 15.4 Appeals from Final Orders of the Division ................................................................................38 15.5 Request for Administrative Review to the Secretary of Human Services pursuant to 33 V.S.A.
§909(a)(3) .................................................................................................................................................39 15.6 Appeal to Vermont Supreme Court pursuant to 33 V.S.A. §909(a)(1) ......................................40 15.7 Appeal to Superior Court pursuant to 33 V.S.A. §909(a)(2) ......................................................40 15.8 Settlement Agreements ...............................................................................................................40
16 DEFINITIONS AND TERMS ........................................................................................... 40
17 TRANSITIONAL PROVISIONS ...................................................................................4344
17.1 Companion Aide Pilot Project .....................................................................................................4344
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -1- DIVISION OF RATE SETTING
1 GENERAL PROVISIONS
1.1 Purpose
The purpose of these rules is to implement
state and federal reimbursement policy with
respect to nursing facilities providing
services to Medicaid eligible persons. The
methods, standards, and principles of rate
setting established herein reflect the
objectives set out in 33 V.S.A. §901 and
balance the competing policy objectives of
access, quality, cost containment and
administrative feasibility. Rates set under this
payment system are consistent with the
efficiency, economy, and quality of care
necessary to provide services in conformity
with state and federal laws, regulations,
quality and safety standards, and meet the
requirements of 42 U.S.C. §1396a(a)(13)(A).
1.2 Scope
These rules apply to all privately owned
nursing facilities and state nursing facilities
providing services to Medicaid residents.
Long-term care services in swing-bed
hospitals, and Intermediate Care Facilities for
the Mentally Retarded are reimbursed under
different methods and standards. Swing-bed
hospitals are reimbursed pursuant to 42
U.S.C. §1396l(b)(1). Intermediate Care
Facilities for the Mentally Retarded are
reimbursed pursuant to the Regulations
Governing the Operation of Intermediate
Care Facilities for the Mentally Retarded
adopted by the Agency and are subject to the
Division’s Accounting Requirements
(Section 2) and Financial Reporting (Section
3).
1.3 Authority
These rules are promulgated pursuant to 33
V.S.A. §§904(a) and 908(c) to meet the
requirements of 33 V.S.A. Chapter 9, 42
U.S.C. §§1396a(a)(13)(A) and
§1396a(a)(30).
1.4 General Description of the Rate Setting
System
A prospective case-mix payment system for
nursing facilities is established by these rules
in which the payment rate for services is set
in advance of the actual provision of those
services. A per diem rate is set for each
facility based on the historic allowable costs
of that facility. The costs are divided into
certain designated cost categories, some of
which are subject to limits. The basis for
reimbursement within the Nursing Care cost
category is a resident classification system
that groups residents into classes according
to their assessed conditions and the resources
required to care for them. The costs in some
categories are adjusted to reflect economic
trends and conditions, and the payment rate
for each facility is based on the per diem
costs for each category.
1.5 Requirements for Participation in
Medicaid Program
(a) Nursing facilities must satisfy all of the
following prerequisites in order to participate
in the Medicaid program:
(1) be licensed by the Agency, pursuant to
33 V.S.A. §7103(b),
(2) be certified by the Secretary of Health
and Human Services pursuant to 42 C.F.R.
Part 442, Subpart C, and
(3) have executed a Provider Agreement
with the Agency, as required by 42 C.F.R.
Part 442, Subpart B.
(b) To the extent economically and
operationally feasible, providers are
encouraged, but not required, to be certified
for participation in the Medicare program,
pursuant to 42 C.F.R. §488.3.
(c) Medicaid payments shall not be made to
any facility that fails to meet all the
requirements of Subsection 1.5(a).
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -2- DIVISION OF RATE SETTING
1.6 Responsibilities of Owners
The owner of a nursing facility shall
prudently manage and operate a residential
health care program of adequate quality to
meet its residents’ needs. Neither the
issuance of a per diem rate, nor final orders
made by the Director or a duly authorized
representative shall in any way relieve the
owner of a nursing facility from full
responsibility for compliance with the
requirements and standards of the Agency of
Human Services.
1.7 Duties of the Owner
The owner of a nursing facility, or a duly
authorized representative shall:
(a) Comply with the provisions of
Subsections 1.5 and 1.6 setting forth the
requirements for participation in the
Medicaid Program.
(b) Submit cost reports in accordance with
the provisions of subsections 3.2 and 3.3 of
these rules.
(c) Maintain adequate financial and statistical
records and make them available at
reasonable times for inspection by an
authorized representative of the Division, the
state, or the federal government.
(d) Assure that an annual audit is performed
in conformance with Generally Accepted
Auditing Standards (GAAS).
(e) Assure that the construction of buildings
and the maintenance and operation of
premises and programs comply with all
applicable health and safety standards.
(f) Notwithstanding any other provision of
these rules, any provider that fails to make a
complete cost report filing within the time
prescribed in subsection 3.3(a) or fails to file
any other materials requested by the Division
within the time prescribed shall receive no
increase to its Medicaid rate until the first
day of the calendar quarter after a complete
cost report or the requested materials are
filed, unless within an extension of time
previously approved by the Division.
1.8 Powers and Duties of the Division and
the Director
(a) The Division shall establish and certify to
the Department of Vermont Health Access
per diem rates for payment to providers of
nursing facility services on behalf of
residents eligible for assistance under Title
XIX of the Social Security Act.
(b) The Division may request any nursing
facility or related party or organization to file
such relevant and appropriate data, statistics,
schedules or information as the Division
finds necessary to enable it to carry out its
function.
(c) The Division may examine books and
accounts of any nursing facility and related
parties or organizations, subpoena witnesses
and documents, administer oaths to witnesses
and examine them on all matters over which
the Division has jurisdiction.
(d) From time to time, the Director may issue
notices of practices and procedures employed
by the Division in carrying out its functions
under these rules.
(e) The Director shall prescribe the forms
required by these rules and instructions for
their completion.
(f) Copies of each notice of practice and
procedure, form, or set of instructions shall
be sent to each nursing facility participating
in the Medicaid program at the time it is
issued. A compilation of all such documents
currently in force shall be maintained at the
Division, pursuant to 3 V.S.A. §835, and
shall be available to the public.
(g) Neither the issuance of final per diem
rates nor Final Orders of the Division which
fail, in any one or more instances, to enforce
the performance of any of the terms or
conditions of these rules shall be construed as
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -3- DIVISION OF RATE SETTING
a waiver of the Division’s future performance
of the right. The obligations of the provider
with respect to performance shall continue,
and the Division shall not be estopped from
requiring such future performance.
1.9 Powers and Duties of the Department of
Disabilities, Aging and Independent
Living’s Division of Licensing and
Protection as Regards Reimbursement
(a) The Division of Licensing and Protection
of the Department of Disabilities, Aging and
Independent Living shall receive from
providers resident assessments on forms it
specifies. The Department of Disabilities,
Aging and Independent Living shall process
this information and shall periodically, but no
less frequently than quarterly, provide the
Division of Rate Setting with the average
case-mix scores of each facility based upon
the federal RUG IV classification system (48
group version). This score will be used in the
quarterly determination of the Nursing Care
portion of the rate.
(b) The management of the resident
assessment process used in the determination
of case-mix scores shall be the duty of the
Division of Licensing and Protection of the
Department of Disabilities, Aging and
Independent Living. Any disagreements
between the facility’s assessment of a
resident and the assessment of that same
resident by the audit staff of Licensing and
Protection shall be resolved with the Division
of Licensing and Protection and shall not
involve the Division of Rate Setting. As the
final rates are prospective and adjusted on a
quarterly basis to reflect the most current
data, the Division of Rate Setting will not
make retroactive rate adjustments as a result
of audits or successfully appealed individual
case-mix scores.
1.10 Computation of and Enlargement of
Time; Filing and Service of Documents
(a) In computing any period of time
prescribed or allowed by these rules, the day
of the act or event from which the designated
period of time begins to run shall not be
included. The last day of the period so
computed shall be included, unless it is a
Saturday, a Sunday, or a state or federal legal
holiday, in which event the period runs until
the end of the next day which is not a
Saturday, a Sunday, or a state or federal legal
holiday.
(b) For the purposes of any provision of these
rules in which time is computed from the
receipt of a notice or other document issued
by the Division or other relevant
administrative officer, the addressee of the
notice shall be rebuttably presumed to have
received the notice or other document three
days after the date on the document.
(c) When by these rules or by a notice given
thereunder, an act is required or allowed to
be done at or within a specified time, the
relevant administrative officer, for just cause
shown, may at any time in her or his
discretion, with or without motion or notice,
order the period enlarged. This subsection
shall not apply to the time limits for appeals
to the Vermont Supreme Court or Superior
Court from Final Orders of the Division or
Final Determinations of the Secretary, which
are governed by the Vermont Rules of
Appellate Procedure and the Vermont Rules
of Civil Procedure respectively.
(d) Filing shall be deemed to have occurred
when a document is received and date-
stamped as received at the office of the
Division or in the case of a document
directed to be filed under this rule other than
at the office of the Division, when it is
received and stamped as received at the
appropriate office. Filings with the Division
may be made by telefacsimile (FAX), but the
sender bears the risk of a communications
failure from any cause. Filings with the
Division may also be made electronically,
but the sender bears the risk of a
communications failure from any cause,
including, but not limited to, filings blocked
due to size.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -4- DIVISION OF RATE SETTING
(e) Service of any document required to be
served by this rule shall be made by
delivering a copy of the document to the
person or entity required to be served or to
his or her representative or by sending a copy
by prepaid first class mail to the official
service address. Service by mail is complete
upon mailing.
1.11 Representation in All Matters before the
Division
(a) A facility may be represented in any
matter under this rule by the owner (in the
case of a corporation, partnership, trust, or
other entity created by law, through a duly
authorized agent), the nursing facility
administrator, or by a licensed attorney or an
independent public accountant.
(b) The provider shall file written notification
of the name and address of its representative
for each matter before the Division.
Thereafter, on that matter, all correspondence
from the Division will be addressed to that
representative. The representative of a
provider failing to so file shall not be entitled
to notice or service of any document in
connection with such matter, whether
required to be made by the Division or any
other person, but instead service shall be
made directly on the provider.
1.12 Severability
If any part of these rules or their application
is held invalid, the invalidity does not affect
other provisions or applications which can be
given effect without the invalid provision or
application, and to this end the provisions of
these rules are severable.
1.13 Effective Date
(a) These rules are effective from January 29,
1992, (as amended June 18, 1993, July 1,
1994, January 4, 1995, January 1, 1996,
January 1, 1997, July 1, 1998, May 1, 1999,
July 1, 1999, August 1, 1999, July 1, 2001,
November 1, 2002, May 1, 2004, July 1,
2004, July 1, 2005, October 29, 2007,
August 25, 2008, April 1, 2011, September
17, 2012, September 9, 2013, and March 6,
2015).
(b) Application of Rule: Amended provisions
of this rule shall apply to:
(1) all cost reports draft findings issued on
or after the effective date of the most recent
amendment, and
(2) all rates set on or after the effective date
of the most recent amendment.
(c) With respect to any administrative
proceeding pending on the effective date of
the most recent amendment the Director or
the Secretary may apply any provision of
such prior rules where the failure to do so
would work an injustice or substantial
inconvenience.
2 ACCOUNTING REQUIREMENTS
2.1 Accounting Principles
(a) All financial and statistical reports shall
be prepared in accordance with Generally
Accepted Accounting Principles (GAAP),
consistently applied, unless these rules
authorize specific variations in such
principles.
(b) The provider shall establish and maintain
a financial management system which
provides for adequate internal control
assuring the accuracy of financial data,
safeguarding of assets and operational
efficiency.
(c) The provider shall report on an accrual
basis. The provider whose records are not
maintained on an accrual basis shall develop
accrual data for reports on the basis of an
analysis of the available documentation. In
such a case, the provider’s accounting
process shall provide sufficient information
to compile data to satisfy the accrued
expenditure reporting requirements and to
demonstrate the link between the accrual data
reports and the non-accrual fiscal accounts.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -5- DIVISION OF RATE SETTING
The provider shall retain all such
documentation for audit purposes.
2.2 Procurement Standards
(a) Providers shall establish and maintain a
code of standards to govern the performance
of its employees engaged in purchasing
goods and services. Such standards shall
provide, to the maximum extent practical,
open and free competition among vendors.
Providers should participate in group
purchasing plans when feasible.
(b) If a provider pays more than a
competitive bid for a good or service, any
amount over the lower bid which cannot be
demonstrated to be a reasonable and
necessary expenditure that satisfies the
prudent buyer principle is a nonallowable
cost.
2.3 Cost Allocation Plans and Changes in
Accounting Principles
With respect to the allocation of costs to the
nursing facility and within the nursing
facility, the following rules shall apply:
(a) [Repealed]
(b) Providers that have costs allocated from
related entities included in their cost reports
shall include, as a part of their cost report
submission, a summary of the allocated
costs, including a reconciliation of the
allocated costs to the entity’s financial
statements, which must also be submitted
with the Medicaid cost report. In the case of a
home office or related management
company, this would include a completed
Home Office Cost Statement. The provider
shall submit this reconciliation with the
Medicaid cost report.
(c) The Division reserves the right not to
recognize changes in accounting principles or
methods or basis of cost allocation made for
the purpose or having the likely effect of
increasing a facility’s Medicaid payments.
(d) [Repealed]
(e) [Repealed]
(f) Each provider shall notify the Division of
changes in statistical allocations or record
keeping required by the Medicare
Intermediary.
(g) Preferred statistical methods of allocation
are as follows:
(1) Nursing salaries and supplies - direct
cost,
(2) Plant operations - square footage,
(3) Utilities - square footage,
(4) Laundry - pounds of laundry,
(5) Dietary -resident days,
(6) Administrative and General -
accumulated costs,
(7) [Repealed]
(8) Property and Related - square footage,
(9) Fringe Benefits - direct allocation/gross
salaries.
(h) Food costs included in allocated dietary
costs are calculated by dividing the facility’s
allocated dietary costs by total organization
dietary costs, both of which include allocated
overhead, and multiplying the result by the
total organization food costs.
(i) Utility costs included in allocated plant
operation and maintenance costs are
calculated by dividing the facility’s plant
operation and maintenance costs by total
organization plant operation and maintenance
cost, both of which include allocated
overhead, and multiplying the result by the
total organization utility costs.
(j) All administrative and general costs,
including home office and management
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -6- DIVISION OF RATE SETTING
company costs, allocated to a facility shall be
included in the Indirect Cost category.
(k) The capital component of goods or
services purchased or allocated from a related
or unrelated party, such as plant operation
and maintenance, utilities, dietary, laundry,
housekeeping, and all others, whether or not
acquired from a related party, shall be
considered as costs for that particular good or
service and not classified as Property and
Related costs of the nursing facility.
(l) Costs allocated to the nursing facility shall
be reasonable, as determined by the Division
pursuant to these rules.
2.4 Substance Over Form
The cost effect of transactions that have the
effect of circumventing the intention of these
rules may be adjusted by the Division on the
principle that the substance of the transaction
shall prevail over the form.
2.5 Record Keeping and Retention of
Records
(a) Each provider must maintain complete
documentation, including accurate financial
and statistical records, to substantiate the data
reported on the uniform financial and
statistical report (cost report), and must, upon
request, make these records available to the
Division of Rate Setting, or the U. S.
Department of Health and Human Services,
and the authorized representatives of both
agencies.
(b) Complete documentation means clear and
compelling evidence of all of the financial
transactions of the provider and affiliated
entities, including but not limited to census
data, ledgers, books, invoices, bank
statements, canceled checks, payroll records,
copies of governmental filings, time records,
time cards, purchase requisitions, purchase
orders, inventory records, basis of
apportioning costs, matters of provider
ownership and organization, resident service
schedule and amounts of income received by
service, or any other record which is
necessary to provide the Director with the
highest degree of confidence in the reliability
of the claim for reimbursement. For purposes
of this definition, affiliated entities shall
extend to realty, management and other
entities for which any reimbursement is
directly or indirectly claimed whether or not
they fall within the definition of related
parties.
(c) The provider shall maintain all such
records for at least six years from the date of
filing, or the date upon which the fiscal and
statistical records were to be filed, whichever
is the later. The Division shall keep all cost
reports, supporting documentation submitted
by the provider, correspondence, workpapers
and other analyses supporting Summaries of
Findings for six years. In the event of
litigation or appeal involving rates
established under these regulations, the
provider and Division shall retain all records
which are in any way related to such legal
proceeding until the proceeding has
terminated and any applicable appeal period
has lapsed.
(d) Pursuant to 33 V.S.A. §908(a), all
documents and other materials filed with the
Division are public information, except for
individually identifiable health information
protected by law or the policies, practices,
and procedures of the Agency of Human
Services. With the exception of the
administrator’s salary, the salaries and wages
of individual employees shall not be made
public.
3 FINANCIAL REPORTING
3.1 [Repealed]
3.2 Uniform Cost Reports
(a) Each long-term care facility participating
in the Vermont Medicaid program shall
annually submit a uniform financial and
statistical report (cost report) on forms
prescribed by the Division. The inclusive
dates of the reporting year shall be the 12
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -7- DIVISION OF RATE SETTING
month period of each provider’s fiscal year,
unless advance authorization to submit a
report for a greater or lesser period has been
granted by the Division.
(1) The Division may require providers to
file special cost reports for periods other
than a facility’s fiscal year.
(2) The Division may require providers to
file budget cost reports. Such cost reports
may be used inter alia as the basis for new
facilities’ rates or for rate adjustments.
(b) The cost report must include the
certification page signed by the owner, or its
representative, if authorized in writing by the
owner.
(c) The original and one copy of the cost
report must be submitted to the Division. All
documents must bear original signatures.
(d) The following supporting documentation
is required to be submitted with the cost
report:
(1) Audited financial statements (except
that at the discretion of the Director, this
requirement may be waived),
(2) Most recently filed Medicare Cost
Report with the required supplemental data
on CMS Form 339 (if a participant in the
Medicare Program), which for hospital-
based nursing homes shall be the Medicare
cost report for the same fiscal year as the
Medicaid cost report,
(3) Independent auditor’s adjusting entries
and reconciliation of the audited financial
statements to the cost report.
(e) A provider must also submit, upon
request during the desk review or audit
process, such data, statistics, schedules or
other information which the Division
requires in order to carry out its function. If,
before the draft findings are issued, the
facility has been specifically requested to
provide certain information or materials and
has failed to do so, such information or
materials will not be admissible in any
subsequent appeal taken pursuant to Section
15, provided the Division has notified the
provider of such failure and afforded the
provider a final opportunity to cure.
(f) Providers shall follow the cost report
instructions prescribed by the Director in
completing the cost report. The chart of
accounts prescribed by the Director, shall be
used as a guideline providing the titles, and
description for type of transactions recorded
in each asset, liability, equity, income, and
expense account.
3.3 Adequacy and Timeliness of Filing
(a) With the exception of hospital-based
nursing homes, an acceptable cost report
filing shall be made on or before the last day
of the fifth month following the close of the
period covered by the report.
(1) Hospital-based nursing homes shall file
their Medicaid cost-reports within five days
after filing their Medicare cost report for
the same cost reporting period with CMS.
(2) If a hospital-based Medicaid nursing
home’s cost report is not filed on or before
June 30 following the end of the facility’s
fiscal year, the Division may require the
facility to provide certain data or to file a
draft cost report.
(b) The Division may reject any filing which
does not comply with these regulations
and/or the cost reporting instructions. In such
case, the report shall be deemed not filed,
until refiled and in compliance.
(c) Extensions for filing of the cost report
beyond the prescribed deadline must be
requested as follows:
(1) All Requests for Extension of Time to
File Cost Report must be in writing, on a
form prescribed by the Director, and must
be received by the Division of Rate Setting
prior to the due date. The provider must
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AGENCY OF HUMAN SERVICES -8- DIVISION OF RATE SETTING
clearly explain the reason for the request
and specify the date on which the Division
will receive the report.
(2) Notwithstanding any previous practice,
the Division will not grant automatic
extensions. Such extensions will be granted
for good cause only, at the Director’s sole
discretion, based on the merits of each
request. A "good cause" is one that supplies
a substantial reason, one that affords a legal
excuse for the delay or an intervening
action beyond the provider’s control. The
following are not considered "good cause":
ignorance of the rule, inconvenience, or a
cost report preparer engaged in other work.
(d) Notwithstanding any other provision of
these rules, any provider that fails to make a
complete cost report filing within the time
prescribed in subsection 3.3(a) or within an
extension of time approved by the Division,
shall be subject to the provisions of
subsection 1.7(f).
3.4 Review of Cost Reports by Division
(a) Uniform Desk Review
(1) The Division shall perform a uniform
desk review on each cost report submitted.
(2) The uniform desk review is an analysis
of the provider’s cost report to determine
the adequacy and completeness of the
report, accuracy and reasonableness of the
data recorded thereon, allowable costs and
a summary of the results of the review for
the purpose of either settling the cost report
without an on-site audit or determining the
extent to which an on-site audit verification
is required.
(3) Uniform desk reviews shall be
completed within an average of 18 months
after receipt of an acceptable cost report
filing, except in unusual situations,
including but not limited to, delays in
obtaining necessary information from a
provider. Notwithstanding this subdivision,
the Division shall have an additional six
months to complete its review or audits of
facilities’ base year cost reports.
(4) Unless the Division schedules an on-site
audit, it shall issue a written summary
report of its findings and adjustments upon
completion of the uniform desk review.
(b) On-site Audit
(1) The Division will perform on-site
audits, as considered appropriate, of the
provider’s financial and statistical records
and systems in accordance with the relevant
provisions of the Medicare Intermediary
Manual - Audits-Reimbursement Program
Administration, CMS Publication 13-2
(CMS-13).
(2) The Division will base its selection of a
facility for an on-site audit on factors such
as length of time since last audit, changes in
facility ownership, management, or
organizational structure, evidence or
official complaints of financial
irregularities, questions raised in the
uniform desk review, failure to file a timely
cost report without a satisfactory
explanation, and prior experience.
(3) The audit scope will be limited so as to
avoid duplication of work performed by an
independent public accountant, provided
such work is adequate to meet the
Division’s audit requirements.
(4) Upon completion of an audit, the
Division shall review its draft findings and
adjustments with the provider and issue a
written summary report of such findings.
(c) The procedure for issuing and reviewing
Summaries of Findings is set out in
Subsections 15.1, 15.2 and 15.3.
3.5 Settlement of Cost Reports
(a) A cost report is settled if there is no
request for reconsideration of the Division’s
findings or, if such request was made, the
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Division has issued a final order pursuant to
Subsection 15.3 of these rules.
(b) Cost report determinations and decisions,
otherwise final, may be reopened and
corrected when the specific requirements set
out below are met. The Division’s decision to
reopen will be based on new and material
evidence submitted by the provider, evidence
of a clear and obvious material error, or a
determination by the Secretary or a court of
competent jurisdiction that the determination
is inconsistent with applicable law,
regulations and rulings, or general
instructions.
(c) Reopening means an affirmative action
taken by the Division to re-examine the
correctness of a determination or decision
otherwise final. Such action may be taken:
(1) On the initiative of appropriate authority
within the applicable time period set out in
paragraph (f), or
(2) In response to a written request of the
provider or other relevant entity, filed with
the Division within the applicable time
period set out in subsection (f), and
(3) When the reopening has a material
effect (more than one percent) on the
provider’s Medicaid rate payments.
(d) A correction is a revision (adjustment) in
the Division’s determination or Secretary’s
decision, otherwise final, which is made after
a proper re-opening.
(e) A correction may be made by the
Division, or the provider may be required to
file an amended cost report. If the cost report
is reopened by an order of the Secretary or a
court of competent jurisdiction, the
correction shall be made by the Division.
(f) A determination or decision may be
reopened within three years from the date of
the notice containing the Division’s
determination, or the date of a decision by
the Secretary or a court.
(g) The Division may also require or allow
an amended cost report to correct material
errors detected subsequent to the filing of the
original cost report or to comply with
applicable standards and regulations. Once a
cost report is filed, the provider is bound by
its elections. The Division shall not accept an
amended cost report to avail the provider of
an option it did not originally elect.
4 DETERMINATION OF ALLOWABLE
COSTS FOR NURSING FACILITIES
4.1 Provider Reimbursement Manual and
GAAP
In determining the allowability or
reasonableness of costs or treatment of any
reimbursement issue, not addressed in these
rules, the Division shall apply the appropriate
provisions of the Medicare Provider
Reimbursement Manual (CMS-15, formerly
known as HCFA or HIM-15). If neither these
regulations nor CMS-15 specifically
addresses a particular issue, the
determination of allowability will be made in
accordance with Generally Accepted
Accounting Principles (GAAP). The Division
reserves the right, consistent with applicable
law, to determine the allowability and
reasonableness of costs in any case not
specifically covered in the sources referenced
in this subsection.
4.2 General Cost Principles
For rate setting purposes, a cost must satisfy
criteria, including, but not limited to, the
following:
(a) The cost must be ordinary, reasonable,
necessary, related to the care of residents,
and actually incurred.
(b) The cost adheres to the prudent buyer
principle.
(c) The cost is related to goods and/or
services actually provided in the nursing
facility.
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4.3 Non-Recurring Costs
(a) Non-recurring costs shall include:
(1) any reasonable and resident-related cost
that exceeds $10,000, which is not expected
to recur on an annual basis in the ordinary
operation of the facility, may be designated
by the Division as a "Non-Recurring Cost"
subject to any limits on the cost category
into which the type of cost would otherwise
be assigned,
(2) litigation expenses of $10,000 or more,
recognized pursuant to subsection 4.20.
(3) allowable lump-sum costs of $2,000 or
more per cost reporting period for
recruitment and legal fees or similar
expenses associated with the hiring of
registered nurses from countries outside the
United States on condition that such fees or
expenses shall be allowable only in respect
of such nurses who are paid at least the
prevailing salary/wage and benefits for
employed nurses of similar qualifications
and experience in the geographic area in
which the facility is located or tuition
expenses for nurse aide training reimbursed
pursuant to 42 C.F.R. §483.152(c)(2).
(b) A non-recurring cost shall be capitalized
and amortized and carried as an on-going
adjustment beginning with the first quarterly
rate change after the settlement of the cost
report for a period of three years.
4.4 Interest Expense
(a) Necessary and proper interest is an
allowable cost.
(b) “Necessary requires that:
(1) The interest be incurred on a loan made
to satisfy a financial need of the provider.
(2) A financial need does not exist if the
provider has cash and/or cash equivalents
of more than 60 days cash needs.
(3) Cash and cash equivalents include:
(i) monetary investments, including
unrestricted grants and gifts,
(ii) non-monetary investments not related
to resident care that can readily be
converted to cash net of any related
liability,
(iii) receivables from (net of any payables
to) officers, owners, partners, parent
organizations, brother/sister
organizations, or other related parties,
excluding education loans to employees.
(iv) receivables that result from
transactions not related to resident care.
(4) Cash and cash equivalents exclude:
(i) funded depreciation recognized by the
Division,
(ii) restricted grants and gifts.
(5) Interest income offset.
(i) Interest expense shall be reduced by
realized investment income, except where
such income is from:
(A) funded depreciation recognized
by the Division pursuant to CMS-
15,
(B) grants and gifts, whether
restricted or unrestricted.
(ii) Only working capital interest expense
shall be offset by interest income derived
from working capital.
(6) The provider must have a legal
obligation to pay the interest.
(c) "Proper" requires that:
(1) Interest be incurred at a rate not in
excess of what a prudent buyer would have
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
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had to pay in the money market existing at
the time the loan was made.
(2) Interest must be paid to a lender that is
not a related party of the borrowing
organization except as provided in
paragraph (k).
(d) Interest expense shall be included in
property costs if the interest is necessary and
proper and if it is incurred as a result of
financing the acquisition of fixed assets
related to resident care.
(e) The date of such financing must be within
60 days of the date the asset is put in use,
except for assets approved through the
Certificate of Need process or approved by
the Division under Subsection 4.11 of this
rule. Allowable interest, on loans financed
more than 60 days before or after the asset is
put in use, will be included in Indirect Costs
for the entire term of the loan.
(f) Borrowings to finance asset additions
cannot exceed the sum of the basis of the
asset(s), determined in accordance with
Subsections 4.5 and 4.7, and other costs
allowed pursuant to paragraph (g) related to
the borrowing. The limit on borrowings
related to fixed assets is determined as
follows:
Basis of the assets recognized by the
Division, plus a proportionate share of
other costs allowed pursuant to paragraph
(g), or
the principal amount of the loan, whichever
is the lower:
Less: The provider’s cash and cash
equivalents in excess of 60 days needs, per
subparagraph (b)(2) of this subsection.
Equals: The limits on borrowings related to
fixed assets.
(g) Other costs related to the acquisition of
the assets may be included in loans where the
interest is recognized by the Division. These
costs include bank finance charges, points
and costs for legal and accounting fees, and
discounts on debentures and letters of credit.
(h) Necessary and proper interest expense on
debt incurred other than for the acquisition of
assets shall be recognized as working capital
interest expense and included in Indirect
Costs.
(i) Application of Principal Payments.
(1) For loans entered into before a facility’s
1998 fiscal year, principal payments shall
be applied first to loan balances on
allowable borrowings and second to non-
allowable loan balances.
(2) For loans entered into during or after a
facility’s 1998 fiscal year, principal
payments shall be applied to allowable and
non-allowable loan balances on the ratio of
each to the total amount of the loan.
(j) Refinancing of indebtedness.
(1) The provider must demonstrate to the
Division that the costs of refinancing will
be less than the allowable costs of the
current financing.
(2) Costs of refinancing must include
accounting fees, legal fees and debt
acquisition costs related to the refinancing.
(3) Material interest expense related to the
original loan’s unpaid interest charges, to
the extent that it is included in the
refinanced loan’s principal, shall not be
allowed.
(4) A principal balance in excess of the sum
of the principal balance of the previous
financing plus accounting fees, legal fees
and debt acquisition costs shall be
considered a working capital loan, subject
to the cash needs test in subsection
4.4(b)(2), unless the provider demonstrates
to the Division that the excess was for the
acquisition of assets as set forth in (a)
through (g).
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AGENCY OF HUMAN SERVICES -12- DIVISION OF RATE SETTING
(k) Interest expense incurred as a result of
transactions with a related party (or related
parties) will be recognized if the expense
would otherwise be allowable and if the
following conditions are met:
(1) The interest expense relates to a first
and/or second mortgage or to assets leased
from a related party where the costs to the
related party are recognized in lieu of rent.
(2) The interest rate is no higher than the
rate charged by lending institutions at the
inception of the loan.
(l) Interest is not allowable with respect to
any capital expenditure in property, plant and
equipment related to resident care which
requires approval, if the necessary approval
has not been granted.
(m) Interest on loans that do not include
reasonable and ordinary principle repayments
in the debt service payments shall not be
allowable except to the extent that it would
have been incurred pursuant to a standard
amortization schedule for a term equivalent
to the useful life of the asset.
4.5 Basis of Property, Plant and Equipment
(a) The basis of a donated asset is the fair
market value.
(b) The basis of other assets that are owned
by a provider and used in providing resident
care shall generally be the lower of cost or
fair market value. Specific exceptions are
addressed elsewhere in this rule. Cost
includes:
(1) purchase price,
(2) sales tax,
(3) costs to prepare the asset for its intended
use, such as, but not limited to, costs of
shipping, handling, installation,
architectural fees, consulting and legal fees.
(c) The basis of assets constructed by the
provider to provide resident care shall be
determined from the construction costs which
include:
(1) all direct costs, including, but not
limited to, salaries and wages, the related
payroll taxes and fringe benefits, purchase
price of materials, sales tax, costs of
shipping, handling and installation, costs
for permits, architectural fees, consulting
fees and legal fees.
(2) indirect costs related to the construction
of the asset.
(3) interest costs related to capital
indebtedness used to finance the
construction of the asset and prepare it for
its intended use.
(d) The basis of betterments or
improvements, if they extend the useful life
of an asset two or more years or significantly
increase the productivity of an asset are costs
as set forth in paragraphs (b) and (c) above.
(e) Any asset that has a basis of $2,000 or
more and an estimated useful life of two or
more years must be capitalized and
depreciated in accordance with Subsection
4.6. Groups of assets with the majority of
assets in the group valued at $300 or more
and a useful life of two years or more must
also be capitalized and depreciated in
accordance with Subsection 4.6. Assets or
groups of assets with a basis lower than
$2,000 may be expensed or depreciated at the
provider’s election.
(f) The gain on a transfer of an asset to a
related party shall be calculated as follows:
the fair market value of the asset, less the net
book value will be the gain irrespective of the
of the amount paid to the facility for the
asset. This gain will be offset against
property and related costs.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -13- DIVISION OF RATE SETTING
4.6 Depreciation and Amortization of
Property, Plant and Equipment
(a) Costs for depreciation and amortization
must be based on property records sufficient
in detail to identify specific assets.
(b) Depreciation and amortization must be
computed on the straight-line method.
(c) The depreciable basis of an asset shall be
the basis established according to
Subsections 4.5 and 4.7, net of any salvage
value.
(d) The estimated useful life of an asset shall
be determined by the Division as follows:
(1) The recommended useful life is the
number of years listed in the most recent
edition of Estimated Useful Lives of
Depreciable Hospital Assets, published by
the American Hospital Association.
(2) Leasehold improvements may be
amortized over the term of an arms-length
lease, including renewal period, if such a
lease term is shorter than the estimated
useful life of the asset.
4.7 Change in Ownership of Depreciable
Assets - Sales of Facilities
(a) A change of ownership will be recognized
when the following criteria have been met:
(1) The change of ownership did not occur
between related parties, except for
transactions that meet the criteria in
subparagraph (2).
(2) The transaction takes place between
family members and meets the following
conditions:
(i) The Division shall be notified at least
two years before the sale. The notice shall
include a description of the terms and
conditions of the sale and be accompanied
by a current appraisal of the facility being
sold.
(ii) The buyer shall demonstrate the
capacity to manage and/or administer the
facility; or if the buyer is to be an
absentee owner, the buyer shall
demonstrate that there will be sufficient
capable staff to operate the facility
according to standards prescribed by state
and federal law.
(iii) The seller shall not maintain full time
employment with the facility, except for a
transition period which shall not be longer
than one year during which the seller may
provide reasonable consultation to assure
a smooth transition.
(iv) A sale of the facility shall not have
occurred between any members of the
same family within the previous 12 years.
(v) For the purposes of this subsection,
family members shall include spouses,
parents, grandparents, children,
grandchildren, brothers, sisters, spouses
of parents, grandparents, children,
grandchildren, brothers and sisters, aunts,
uncles, nieces and nephews, or such other
familial relationships as the Director may
reasonably approve in the circumstances
of the transaction.
(3) The change of ownership was made for
reasonable consideration.
(4) The change of ownership was a bona
fide transfer of all the powers and indicia of
ownership.
(5) The change in ownership is in substance
the sale of the assets or stock of the facility
and not a method of financing.
(i) If the transferor and the transferee
enter into a financing agreement, the
agreement must be constructed to effect a
complete change of ownership. The
Division shall determine if the agreement
does in substance effect a complete
change of ownership and the Division
shall monitor the compliance with the
agreement.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -14- DIVISION OF RATE SETTING
(ii) Where, subsequent to a change of
ownership, the transferor forgives or
reduces the debt of the transferee, the
amount of the forgiveness or reduction
shall be retroactively applied to the
acquisition or basis of the asset as
determined by the Division.
(6) The buyer shall demonstrate to the
satisfaction of the Division that all
obligations to the State of Vermont arising
out of the transaction have been satisfied.
(7) For rate setting purposes, the transfer of
stock or shares shall not be recognized as a
change in ownership in the following
circumstances:
(i) the transferred stock or shares are
those of a publicly traded corporation.
(ii) the transfer was made solely as a
method of financing (not as a method of
transferring management or control) and
the number of shares transferred does not
exceed 25 percent of the total number of
shares in any one class of stock.
(b) Where the Division recognizes the change
in ownership of an asset, the basis of the
assets for the new owner shall be determined
as follows:
(1) If the seller did not own the assets
during the entire twelve year period
immediately preceding the change in
ownership or if the seller’s facility did not
receive Vermont Medicaid reimbursement
during the entire twelve year period
immediately preceding the change in
ownership, the depreciable cost basis of the
transferred asset for the new owner shall be
the lowest of:
(i) the fair market value of the assets,
(ii) the acquisition cost of the asset to the
buyer,
(iii) the original basis of the asset to the
seller as recognized by the Division, less
accumulated depreciation.
(2) If the seller owned the assets during the
entire twelve year period immediately
preceding the change in ownership and if
the seller’s facility received Vermont
Medicaid reimbursement during the entire
twelve year period immediately preceding
the change in ownership, the depreciable
cost basis of the transferred fixed
equipment and building improvements for
individual assets having an original useful
life of at least 20 years in agreement with
the useful life assigned in the American
Hospital Association guidelines, the
depreciable cost basis of land
improvements, the depreciable cost basis of
buildings and the cost basis of land for the
new owner shall be the lowest of:
(i) the fair market value of the assets,
(ii) the acquisition cost of the asset to the
buyer,
(iii) the amount determined by the
revaluation of the asset. An asset is
revalued by increasing the original basis
of the asset to the seller, as recognized by
the Division, by an annual percentage
rate. The annual percentage rate will be
limited to the lower of:
(A) One-half the percentage increase
in the Consumer Price Index (CPI)
for All Urban consumers (United
States City Average).
(B) One-half the percentage change
in an appropriate construction cost
index as determined by the Division
of Rate Setting, which change shall
not be greater than one-half of the
percentage increase in the Dodge
Construction index (or a reasonable
proxy therefor) for the same period.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -15- DIVISION OF RATE SETTING
(3) If the seller owned the assets during the
entire twelve year period immediately
preceding the change in ownership and if
the seller’s facility received Vermont
Medicaid reimbursement during the entire
twelve year period immediately preceding
the change in ownership, the depreciable
cost basis of individual assets categorized
as building improvements and fixed
equipment with an original useful life of
less than 20 years, in agreement with the
useful life assigned in the American
Hospital Association guidelines, shall be
the seller’s net book value and shall be
depreciated over a useful life of seven
years.
(4) If the seller owned the assets during the
entire twelve year period immediately
preceding the change in ownership and if
the seller’s facility received Vermont
Medicaid reimbursement during the entire
twelve year period immediately preceding
the change in ownership, the depreciable
cost basis of moveable equipment and
vehicles shall be the seller’s net book value
and shall be depreciated over a useful life
of ten years.
4.8 [Repealed]
4.9 Leasing Arrangements for Property,
Plant and Equipment
Leasing arrangements for property, plant and
equipment must meet the following
conditions:
(a) Rent expense on facilities and equipment
leased from a related organization will be
limited to the Medicaid allowable interest,
depreciation, insurance and taxes incurred for
the year under review, or the price of
comparable services or facilities purchased
elsewhere, whichever is lower.
(b) Rental or leasing charges, including sale
and leaseback agreements for property, plant
and equipment to be included in allowable
costs cannot exceed the amount which the
provider would have included in allowable
costs had it purchased or retained legal title
to the asset, such as interest on mortgage,
taxes, insurance and depreciation.
4.10 Funding of Depreciation
(a) Funding of depreciation is not required,
but it is strongly recommended that providers
use this mechanism as a means of conserving
funds for replacement of depreciable assets,
and coordinate their planning of capital
expenditures with area-wide planning of
community and state agencies. As an
incentive for funding, investment income on
funded depreciation will not be treated as a
reduction of allowable interest expense.
(b) To the extent that the provider fails to
retain sufficient working capital or sufficient
resources to support operations, before
making deposits in a funded depreciation
account, the deposits will not be recognized
as funded depreciation.
(c) To the extent that funded depreciation in
the cost reporting period under consideration
is used for purposes other than nursing
facility asset acquisition, interest income on
those sums will be offset against interest
expense not only in the current period, but
the Division may reopen settled cost reports
for previous periods to revise funded
depreciation and allowable interest expense.
However, with the prior approval of the
Division, under appropriate conditions, some
or all of a provider’s funded depreciation
may be used as follows without triggering an
interest income offset:
(1) to convert existing nursing home beds
to residential care or assisted living, or
(2) when more economic, for new
construction of residential care or assisted
living units with a reduction in licensed
nursing home beds.
(d) All relevant provisions of CMS-15 shall
be followed, except as noted below:
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AGENCY OF HUMAN SERVICES -16- DIVISION OF RATE SETTING
(1) Replacement reserves. Some lending
institutions require funds to be set aside
periodically for replacement of fixed assets.
The periodic amounts set aside for this
purpose are not allowable costs in the
period expended, but will be allowed when
withdrawn and utilized either through
depreciation or expense after considering
the usage of these funds. Since the
replacement reserves are essentially the
same as funded depreciation the same
regulations regarding interest will apply.
(2) If a facility is leased from an unrelated
party and the ownership of the reserve rests
with the lessor, then the replacement
reserve payment becomes part of the lease
payment and is considered an allowable
cost in the year expended. If the lessee is
allowed to use this replacement reserve for
the replacement of the lessee’s assets,
lessee shall not be allowed to depreciate the
assets purchased.
(e) The provider must maintain appropriate
documentation to support the funded
depreciation account and income earned
thereon to be eligible for relief from the
investment income offset.
4.11 Adjustments for Large Asset
Acquisitions and Changes of Ownership
(a) Large Asset Acquisitions
(1) A provider may apply to the Division
for an adjustment to the property and
related component of the rate for individual
capital expenditures determined to be
necessary and reasonable. No application
for a rate adjustment should be made if the
change to the rate would be smaller than
one half of one percent of the facility’s rate
in effect at the time the application is made.
Interest expense related to these assets,
provided it is necessary and reasonable,
shall be included in calculating the
adjustment.
(2) In the event that approval is granted by
the Division, the adjustment will be made
effective from the first day of the quarter
after the filing date of the written notice,
following the date of the final order on the
application, or following the date the asset
is actually put into service, whichever is the
latest.
(b) Changes of Ownership
(1) Application shall also be made under
this subsection, no later than 30 days after
the execution of a purchase and sale
agreement or other binding contract, or the
receipt of a Certificate of Need pursuant to
18 V.S.A. §9434, for changes in basis
resulting from a change in ownership of
depreciable assets recognized by the
Division pursuant to Subsection 4.7. The
Division may make related adjustments to
the Property and Related rate component.
(2) Adjustments to the Property and Related
rate component resulting from a change in
ownership of depreciable assets shall be
effective from the first day of the month
following the date of sale.
(c) Except in circumstances determined by the
Division to constitute an emergency precluding
a 60 day notice period, a provider applying for
an adjustment pursuant to this subsection is
required to give 60 days written notice to the
Division prior to the purchase of the asset. Such
applications shall be exempt from the
materiality test set out in subsection 8.7(b), but
are subject to the other provisions of subsection
8.7. The burden is on the provider to document
all information applicable to this adjustment
and to demonstrate that any costs to be incurred
are necessary and reasonable. When applicable,
such documentation shall include the Certificate
of Need application and all supporting financial
information. The Division shall review the
application and issue draft findings approving,
denying, or proposing modifications to the
adjustment applied for within 60 days of receipt
of all information required.
4.12 [Repealed]
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -17- DIVISION OF RATE SETTING
4.13 Advertising Expenses
The reasonable and necessary expense of
newspaper or other public media
advertisement for the purpose of securing
necessary employees is an allowable cost. No
other advertising expenses are allowed.
4.14 Barber and Beauty Service Costs
The direct costs of barber and beauty services
are not allowable for purposes of Medicaid
reimbursement. However, the fixed costs for
space and equipment related to providing
these services and overhead associated with
billing for these services are allowable.
4.15 Bad Debt, Charity and Courtesy
Allowances
Bad debts, charity and courtesy allowances
are deductions from revenues and are not to
be included in allowable costs.
4.16 Child Day Care
Reasonable and necessary costs incurred for
the provision of day care services to children
of employees performing resident related
functions will be allowable. Costs will be
adjusted by any revenues received for the
provision of care provided to employees’
children. The direct and indirect expenses
related to providing these services to non-
employee children are not an allowable
expense. Costs must be accumulated in a
separate cost center. Revenues earned from
providing day care must be identified for
employees and non-employees in a separate
account.
4.17 Community Service Activities
As an incentive for nursing home providers
to furnish needed services (i.e., meals-on-
wheels, adult day and certain respite care,
etc.) to local communities, with the prior
permission of the Division, only direct
identifiable incremental costs will be
adjusted (i.e., food, direct labor and fringe
benefits, transportation). Overhead costs will
not be apportioned for adjustment unless
there is a significant expansion to a program
resulting from community service
involvement. The provider must maintain
auditable records for all incremental direct
costs associated with providing a community
service.
4.18 Dental Services
Costs incurred for services performed in
connection with the care, treatment, filling,
removal, or replacement of teeth or structures
directly supporting teeth will not be allowed
for the purposes of calculating the per diem
rate. Dental services for Medicaid eligible
individuals are covered pursuant to the
Medicaid Covered Services Rules. However,
the fixed costs for space and equipment
related to providing these services and
overhead associated with billing for these
services may be allowable.
4.19 Legal Costs
Necessary, ordinary, and reasonable legal
fees incurred for resident-related activities
will be allowable.
4.20 Litigation and Settlement Costs
(a) Civil and criminal litigation -
(1) General Rule. Attorney fees and other
expenses incurred in conjunction with
litigation will be recognized only to the
extent that the costs are related to resident
care, that the provider prevails, and that the
costs are not covered by insurance.
(2) Settlements. In instances, where a
matter is settled before judgment (whether
or not a lawsuit has been commenced), one
half the costs, including attorney fees,
settlement award, and other expenses,
relating to the matter will be recognized to
the extent that the costs are related to
resident care and are not covered by
insurance.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -18- DIVISION OF RATE SETTING
(3) Costs related to criminal or professional
practice matters are not allowable.
(b) Challenges to decisions of the Division -
Attorney fees and other expenses incurred by
a provider in challenging decisions of the
Division will be allowed based on the extent
to which the provider prevails as determined
on the ratio of total dollars at issue in the
case to the total dollars awarded to the
provider.
(c) All costs recognized pursuant to this
subsection shall be subject to the non-
recurring costs provision in subsection
4.3(a)(2) or subsection 6.4.
4.21 Motor Vehicle Allowance
Cost of operation of a motor vehicle
necessary to meet the facility needs is an
allowable cost. Where the vehicle is used for
personal and business purposes, the portion
of vehicle costs associated with personal use
will not be allowed. If the provider does not
document personal use and business use
under a pre-approved method, DRS reserves
the right to disallow all vehicle costs in
question. All costs in excess of the cost of a
similar size mid-price vehicle are not
allowable.
4.22 Non-Competition Agreement Costs
Amounts paid to the seller of an on-going
facility by the purchaser for an agreement not
to compete are considered capital
expenditures. The amortized costs for such
agreements are not allowable.
4.23 Compensation of Owners, Operators, or
their Relatives
(a) Facilities which have a full-time (40
hours per week minimum) administrator
and/or assistant administrator, will not be
allowed compensation for owners, operators,
or their relatives who claim to provide some
or all of the administrative functions required
to operate the facility efficiently except in
limited and special circumstances such as
those listed in paragraph (b) of this
subsection.
(b) The factors to be evaluated by the
Division in determining the amount
allowable for owner’s compensation shall
include, but not limited to the following:
(1) All applicable Medicare policies
identified in CMS-15.
(2) The unduplicated functions actually
performed, as described by the provider on
the Medicaid cost report.
(3) The hours actually worked and the
number of employees supervised, as
reported on the cost report.
(c) For any facility fiscal year, the maximum
allowable salary for an owner administrator
shall be equal to 110 percent of the average
of all reported administrator salaries for
Vermont nursing facilities participating in the
Medicaid program for that facility fiscal year.
4.24 Management Fees and Home Office
Costs
(a) Management fees, home office costs and
other costs incurred by a nursing facility for
similar services provided by other entities
shall be included in the Indirect Cost
category. These costs are subject to the
provisions for allowable costs, allocation of
costs and related party transactions contained
in these rules and shall include property and
related costs incurred for the management
company. These costs are allowable only if
such costs would be allowable if a nursing
facility provided the services for itself.
(b) Allowable costs shall be limited to five
percent of the total net allowable costs less
reported management fees, home office, or
other costs, as defined in this subsection.
4.25 Membership Dues
Reasonable and necessary membership dues,
including any portions used for lobbying
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -19- DIVISION OF RATE SETTING
activities, shall be considered Medicaid
allowable costs, provided the organization’s
function and purpose are directly related to
providing resident care.
4.26 Post-Retirement Benefits
The allowability of costs of certain benefits
which may be available to retired personnel
shall be governed by CMS-15, except that all
such costs shall be included in fringe benefits
and shall be allocated accordingly.
4.27 Public Relations
Costs incurred for services, activities and
events that are determined by the Division to
be for public relations purposes will not be
allowed.
4.28 Related Party
Expenses otherwise allowable shall not be
included for purposes of determining a
prospective rate where such expenses are
paid to a related party unless the provider
identifies any such related party and the
expenses attributable to it and demonstrates
that such expenses do not exceed the lower of
the cost to the related party or the price of
comparable services, facilities or supplies
that could be purchased elsewhere. The
Division may request either the provider or
the related party, or both, to submit
information, books and records relating to
such expenses for the purpose of determining
their allowability.
4.29 Revenues
Where a facility reports operating and non-
operating revenues related to goods or
services, the costs to which the revenues
correspond are not allowable. If the specific
costs cannot be identified, the revenues shall
be deducted from the most appropriate costs.
If the revenues are more than such costs, the
deduction shall be equal to such costs.
4.30 Travel/Entertainment Costs
Only reasonable and necessary costs of
meals, lodging, transportation and incidentals
incurred for purposes related to resident care
will be allowed. All costs determined to be
for the pleasure and convenience of the
provider or providers’ representatives will
not be allowed.
4.31 Transportation Costs
(a) Costs of transportation incurred, other
than ambulance services for emergency
transportation or transportation home from a
nursing facility covered pursuant to the
Medicaid Covered Services Rules, that are
necessary and reasonable for the care of
residents are allowable. Such costs shall
include depreciation of utility vehicles,
mileage reimbursement to employees for the
use of their vehicles to provide transportation
for residents, and any contractual
arrangements for providing such
transportation. Such costs shall not be
separately billed for individual residents.
(b) Transportation costs related to residents
receiving kidney dialysis shall be reported in
the Ancillary cost category, pursuant to
subsection 6.7(a)(5).
4.32 Services Directly Billable
Allowable costs shall not include the cost of
services to individual residents which are
ordinarily billable directly to Medicaid
irrespective of whether such costs are
payable by Medicaid.
5 REIMBURSEMENT STANDARDS
5.1 Prospective Case-Mix Reimbursement
System
(a) In general, these rules set out incentives
to control costs and Medicaid outlays, while
promoting access to services and quality of
care.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -20- DIVISION OF RATE SETTING
(b) Case-mix reimbursement takes into
account the fact that some residents are more
costly to care for than others. Thus the
system requires:
(1) the assessment of residents on a form
prescribed by the Director of the Division
of Licensing and Protection;
(2) a means to classify residents into groups
which are similar in costs, known as RUG
IV (48 group version) and
(3) a weighting system which quantifies the
relative costliness of caring for different
classes of residents to determine the
average case-mix score.
(c) Per diem rates shall be prospectively
determined for the rate year based on the
allowable operating costs of a facility in a
Base Year, plus property and related and
ancillary costs from the most recently settled
cost report, calculated as described in
Subsection 9.2.
5.2 Retroactive Adjustments to Prospective
Rates
(a) In general, a final rate may not be
adjusted retroactively.
(b) The Division may retroactively revise a
final rate under the following conditions:
(1) as an adjustment pursuant to Sections 8
and 10;
(2) in response to a decision by the
Secretary pursuant to Subsection 15.5 or to
an order of a court of competent
jurisdiction, whether or not that order is the
result of a decision on the merits, or as the
result of a settlement pursuant to
Subsection 15.8;
(3) for mechanical computation or
typographical errors;
(4) for a terminating facility or a facility in
receivership, pursuant to Subsections 5.10,
8.3, and 10.2;
(5) as a result of revised findings resulting
from the reopening of a settled cost report
pursuant to Subsection 3.5;
(6) in those cases where a rate includes
payment for Ancillary services and the
provider subsequently arranges for another
Medicaid provider to provide and bill
directly for these services;
(7) recovery of overpayments, or other
adjustments as required by law or duly
promulgated regulation;
(8) when a special rate is revised pursuant
to subsection 14.1(e)(2) or
(9) when revisions of final rates are
necessary to pass the upper limits test in 42
C.F.R. §447.272.
5.3 Lower of Rate or Charges
(a) At no time shall a facility’s Medicaid per
diem rate exceed the provider’s average
customary charges to the general public for
nursing facility services in semi-private
rooms at the beginning of the calendar
quarter. In this subsection, “charges” shall
mean the amount actually required to be paid
by or on behalf of a resident (other than by
Medicaid, Medicare Part A or the
Department of Veterans Affairs) and shall
take into account any discounts or contractual
allowances.
(b) It is the duty of the provider to notify the
Division within 10 days of any change in its
charges.
(c) Rates limited pursuant to paragraph (a)
shall be revised to reflect changes in the
provider’s average customary charges to the
general public effective on the latest of the
following:
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -21- DIVISION OF RATE SETTING
(1) the first day of the month in which the
change to the provider’s charges is made if
the changes is effective on the first day of
the month,
(2) the first day of the quarter after the
effective date of the change to the
provider’s charges if the change to the
provider’s charges is not effective on the
first day of the quarter, or
(3) the first day of the following quarter
after the receipt by the Division of
notification of the change pursuant to
paragraph (b).
5.4 Interim Rates
(a) The Division may set interim rates for
any or all facilities. The notice of an interim
rate is not a final order of the Division and is
not subject to review or appeal pursuant to
any provision of these rules or 33 V.S.A.
§909.
(b) Any overpayments or underpayments
resulting from the difference between the
interim and final rates will be either refunded
by the provider or paid to the provider.
5.5 Upper Payment Limits
(a) Aggregate payments to nursing facilities
pursuant to these rules may not exceed the
limits established for such payment in 42
C.F.R. §447.272.
(b) If the Division projects that Medicaid
payments to nursing facilities in the
aggregate will exceed the Medicare upper
limit, the Division shall adopt a rule limiting
some or all of the payments to providers to
the level that would reduce the aggregate
payments to the Medicare upper limit.
5.6 Base Year
(a) A Base Year shall be a calendar year,
January through December.
(b) All costs shall be rebased on July 1, 2007.
Subsequent rebasing for Nursing Care costs
shall occur two years after the last rebase of
such costs. All costs shall be rebased no less
frequently than every four years.
(c) For the purposes of rebasing, the Director
may require individual facilities to file
special cost reports covering the calendar
year when this is not the facility’s fiscal year
or the Division may use the facility’s fiscal
year cost report adjusted by the inflation
factors in subsection 5.8 to the Base Year.
The Director may require audited financial
statements for the special cost reporting
period. The costs of preparing the special
cost report and audited financial statements
are the responsibility of the provider, without
special reimbursement; however, for
reporting purposes, these costs are allowable.
(d) The determination of a Base Year shall be
subject of a notice of practices and
procedures pursuant to Subsection 1.8(d) of
these rules.
5.7 Occupancy Level
(a) A facility should maintain an annual
average level of occupancy at a minimum of
90 percent of the licensed bed capacity.
(b) For facilities with less than 90 percent
occupancy, the number of total resident days
at 90 percent of licensed capacity shall be
used, pursuant to section 7, in determining
the per diem rate for all categories except the
Nursing Care and Ancillary categories.
(c) The 90 percent minimum occupancy
provision in paragraph (b) shall be waived
for facilities with 20 or fewer beds or
terminating facilities pursuant to Subsection
5.10, and when appropriate, for facilities
operating under a receivership pursuant to
Subsection 8.3.
(d) Decreasing the Number of Licensed Beds
– For any facility that operated at less than 90
percent occupancy during the period used as
the cost basis for any rate component subject
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -22- DIVISION OF RATE SETTING
to subsection (b) which subsequently reduces
the number of licensed beds, the minimum
occupancy shall be calculated based on the
number of the facility’s licensed beds on the
first day of the quarter after the facility
notifies the Division of such reduction.
5.8 Inflation Factors
The Director shall use the most recent
publication of the Health Care Cost Service
available June 1 in the calculation of inflation
factors, whether for rebase inflation
calculations or annual inflation calculations.
Different inflation factors are used to adjust
different rate components. Subcomponents of
each inflation factor are weighted in
proportion to the percentage of actual
allowable costs incurred by Vermont
facilities for specific subcomponents of the
relevant cost component. For example, if a
cost in the Nursing Care cost component is
83.4 percent attributable to salaries and
wages and 16.6 percent attributable to
employee benefits, the weights for the two
subcomponents of the Nursing Care inflation
factor shall be 0.834 and 0.166 respectively.
The weights for each inflation factor shall be
recalculated no less frequently than each time
the relevant cost category is rebased.
(a) The Nursing Care rate component shall be
adjusted by an inflation factor that uses two
price indexes to account for estimated
economic trends with respect to two
subcomponents of nursing costs: wages and
salaries, and benefits. The price indexes for
each subcomponent are the wages and
salaries portion of the Health-Care Cost
Service NHMB, and the employee benefits
portion of the NHMB, respectively. An
additional adjustment of one percentage point
shall be made for every 12 month period,
prorated for fractions thereof, from the
midpoint of the base year to the midpoint of
the rate year.
(b) The Resident Care Rate Component shall
be adjusted by an inflation factor that uses
four price indexes to account for estimated
economic trends with respect to the
subcomponents of Resident Care costs:
wages and salaries, employee benefits,
utilities, and food and all other Resident care
costs. The price indexes for each
subcomponent are: the wages and salaries
portion of the Health-Care Cost Service
NHMB, the employee benefits portion of the
NHMB, the utilities portion of the NHMB,
and the food portion of the NHMB
respectively.
(c) The Indirect rate component shall be
adjusted by an inflation factor that uses three
price indexes to account for estimated
economic trends with respect to three
subcomponents of Indirect costs: wages and
salaries, employee benefits, and all other
indirect costs. The price indexes for each
subcomponent are: the wages and salaries
portion of the Health-Care Cost Service
NHMB, the employee benefits portion of the
NHMB and the NECPI-U (all items),
respectively.
(d) The Director of Nursing rate component
shall be adjusted by an inflation factor that
uses two price indexes to account for
estimated economic trends with respect to
two subcomponents of Director of Nursing
costs: wages and salaries and employee
benefits. The price indexes for each
subcomponent are: the wages and salaries
portion of the Health-Care Cost Service
NHMB, and the employee benefits portion of
the NHMB, respectively.
(e) Pursuant to Subsection 1.8(d), the
Division shall issue a description of the
practices and procedures used to calculate
and apply the Inflation Factors.
5.9 Costs for New Facilities
(a) For facilities that are newly constructed,
newly operated as nursing facilities, or new
to the Medicaid program, the prospective
case-mix rate shall be determined based on
budget cost reports submitted to the Division
and the greater of the estimated resident days
for the rate year or the resident days equal to
90 percent occupancy of all beds used or
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -23- DIVISION OF RATE SETTING
intended to be used for resident care at any
time within the budget cost reporting period.
This rate shall remain in effect no longer than
one year from the effective date of the new
rate. The principles on allowability of costs
and existing limits in Sections 4 and 7 shall
apply.
(b) The costs reported in the budget cost
report shall not exceed reasonable budget
projections (adjusted for inflation and
changes in interest rates as necessary)
submitted in connection with the Certificate
of Need.
(c) Property and related costs included in the
rate shall be consistent with the property and
related costs in the approved Certificate of
Need.
(d) At the end of the first year of operation,
the prospective case-mix rate shall be revised
based on the provider’s actual allowable
costs as reported in its annual cost report
filed pursuant to subsection 3.2 for its first
full fiscal year of operation.
5.10 Costs for Terminating Facilities
(a) When a nursing facility plans to
discontinue all or part of its operation, the
Division may adjust its rate so as to ensure
the protection of the residents of the facility.
(b) A facility applying for an adjustment to
its rate pursuant to this subsection must have
a transfer plan approved by the Department
of Disabilities, Aging and Independent
Living, a copy of which shall be supplied to
the Division.
(c) An application under this subsection shall
be made on a form prescribed by the Director
and shall be accompanied by a financial plan
demonstrating how the provider will meet its
obligations set out in the approved transfer
plan.
(d) In approving such an application the
Division may waive the minimum occupancy
requirements in Subsection 5.7, the
limitations on costs in Section 7, or make
such other reasonable adjustments to the
facility’s reimbursement rate as shall be
appropriate in the circumstances. The
adjustments made under this subsection shall
remain in effect for a period not to exceed six
months.
6 BASE YEAR COST CATEGORIES FOR
NURSING FACILITIES
6.1 General
In the case-mix system of reimbursement,
allowable costs are grouped into cost
categories. The accounts to be used for each
cost category shall be prescribed by the
Director. The Base Year costs shall be
grouped into the following cost categories:
6.2 Nursing Care Costs
(a) Allowable costs for the Nursing Care
component of the rate shall include actual
costs of licensed personnel providing direct
resident care, which are required to meet
federal and state laws as follows:
(1) registered nurses,
(2) licensed practical nurses,
(3) certified or licensed nurse aides,
including wages related to initial and on-
going nurse aide training as required by
OBRA,
(4) contract nursing,
(5) the MDS coordinator,
(6) fringe benefits, including child day care.
(b) Costs of bedmakers, geriatric aides,
transportation aides, paid feeding/dining
assistants, ward clerks, medical records
librarians and other unlicensed staff will not
be considered nursing costs. The salary and
related benefits of the position of Director of
Nursing shall be excluded from the
calculation of allowable nursing costs and
shall be reimbursed separately.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -24- DIVISION OF RATE SETTING
6.3 Resident Care Costs
Allowable costs for the Resident Care
component of the rate shall include
reasonable costs associated with expenses
related to direct care. The following are
Resident Care costs:
(a) food, vitamins and food supplements,
(b) utilities, including heat, electricity, sewer
and water, garbage and liquid propane gas,
(c) activities personnel, including
recreational therapy and direct activity
supplies,
(d) Medical Director, Pharmacy Consultant,
Geriatric Consultant, and
Psychological/psychiatric Consultant,
(e) counseling personnel, chaplains, art
therapists and volunteer stipends,
(f) social service worker,
(g) employee physicals,
(h) wages for paid feeding/dining assistants
only for those hours that they are actually
engaged in assisting residents with eating,
(i) fringe benefits, including child day care,
(j) such other items as the Director may
prescribe by a practice and procedure issued
pursuant to subsection 1.8(d).
6.4 Indirect Costs
(a) Allowable costs for the indirect
component of the rate shall include costs
reported in the following functional cost
centers on the facility’s cost report, including
those extracted from a facility’s cost report or
the cost report of an affiliated hospital or
institution.
(1) fiscal services,
(2) administrative services and professional
fees,
(3) plant operation and maintenance,
(4) grounds,
(5) security,
(6) laundry and linen,
(7) housekeeping,
(8) medical records,
(9) cafeteria,
(10) seminars, conferences and other in-
service training (except tuition for college
credit in a discipline related to the
individual staff member’s employment or
costs of obtaining a GED which shall be
treated as fringe benefits),
(11) dietary excluding food,
(12) motor vehicle,
(13) clerical, including ward clerks,
(14) transportation (excluding
depreciation),
(15) insurances (director and officer
liability, comprehensive liability, bond
indemnity, malpractice, premise liability,
motor vehicle, and any other costs of
insurance incurred or required in the care of
residents that has not been specifically
addressed elsewhere),
(16) office supplies/telephone,
(17) conventions and meetings,
(18) EDP bookkeeping/payroll,
(19) fringe benefits including child day
care.
(b) All expenses not specified for inclusion in
another cost category pursuant to these rules
shall be included in the Indirect Costs
category, unless the Director at her/his
discretion specifies otherwise in the
instructions to the cost report, the chart of
accounts, or by the issuance of a practice and
procedure. For nursing facility rate setting,
the costs of prescription drugs are not
allowable.
6.5 Director of Nursing
Allowable costs associated with the position
of Director of Nursing shall include
reasonable salary for one position and
associated fringe benefits, including child
day care.
6.6 Property and Related
(a) The following are Property and Related
costs:
(1) depreciation on buildings and fixed
equipment, major movable equipment,
minor equipment, computers, motor
vehicle, land improvements, and
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -25- DIVISION OF RATE SETTING
amortization of leasehold improvements
and capital leases,
(2) interest on capital indebtedness,
(3) real estate leases and rents,
(4) real estate/property taxes,
(5) all equipment irrespective of whether it
is capitalized, expensed, or rented,
(6) fire and casualty insurance,
(7) amortization of mortgage acquisition
costs.
(b) For a change in services, facility, or a
new health care project with projected
property and related costs of $250,000 or
more, providers shall give written notice to
the Division no less than 60 days before the
commencement of the project. Such notice
shall include a detailed description of the
project and detailed estimates of the costs.
6.7 Ancillaries
(a) The following are ancillary costs:
(1) All physical, speech, occupational,
respiratory, and IV therapy services and
therapy supplies (excluding oxygen) shall
be considered ancillaries. Medicaid
allowable costs shall be based on the cost-
to-charge ratio for these services. These
therapy services shall not be allowable for
Medicaid reimbursement pursuant to this
subsection unless:
(i) the services are provided pursuant to a
physician’s order,
(ii) the services are provided by a licensed
therapist or other State certified or
registered therapy assistant, or qualified
IV professional, or other therapy aides,
(iii) the services are not reimbursable by
the Medicare program, and
(iv) the provider records charges by payor
class for all units of these services.
(2) Medical supplies, whether or not the
provider customarily records charges.
(i) Medical supplies shall include, but are
not limited to: oxygen, disposable
catheters, catheters, colostomy bags,
drainage equipment, trays and tubing.
(ii) Medical supplies shall not include
rented or purchased equipment, with the
exception of rented or purchased oxygen
concentrators, which shall be included in
medical supplies.
(3) Over-the-counter drugs. All drug costs
may be disallowed for providers
commingling the costs of prescription drugs
(which are not allowable) and over-the-
counter drugs.
(4) Incontinent Supplies and Personal Care
Items: including adult diapers, chux and
other disposable pads, personal care items,
such as toothpaste, shampoo, body powder,
combs, brushes, etc.
(5) Dialysis Transportation. The costs of
transportation for Medicaid residents
receiving kidney dialysis shall be included
in the ancillary cost category. Allowable
costs may include contract or other costs,
but shall not include employee salaries or
wages or cost associated with the use of
provider-owned vehicles.
(6) Overhead costs related to ancillary
services and supplies are included in
ancillary costs.
(b) [Repealed]
7 CALCULATION OF COSTS, LIMITS AND
RATE COMPONENTS FOR NURSING
FACILITIES
Base year costs, rates, and category limits are
calculated pursuant to this section. The
Medicaid per diem payment rate for each
facility is calculated pursuant to Section 9.
7.1 Calculation of Per Diem Costs
Per diem costs for each cost category,
excluding the Nursing Care and Ancillary
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -26- DIVISION OF RATE SETTING
cost categories, are calculated by dividing
allowable costs for each case-mix category
by the greater of actual bed days of service
rendered, including revenue generating
hold/reserve days, or the number of resident
days computed using the minimum
occupancy at 90 percent of the licensed bed
capacity during the cost period under review
calculated pursuant to subsection 5.7.
7.2 Nursing Care Component
(a) Case-Mix Weights.
There are 48 case-mix resident classes.
Each case-mix class has a specific case-mix
weight as follows:
Group
Code
Case-Mix
Weight
Description
ES3 3.00 Extensive Services
ES2 2.23 Extensive Services
ES1 2.22 Extensive Services
RAE 1.65 Rehabilitation
RAD 1.58 Rehabilitation
RAC 1.36 Rehabilitation
RAB 1.10 Rehabilitation
RAA 0.82 Rehabilitation
HE2 1.88 Special Care High
HE1 1.47 Special Care High
HD2 1.69 Special Care High
HD1 1.33 Special Care High
HC2 1.57 Special Care High
HC1 1.23 Special Care High
HB2 1.55 Special Care High
HB1 1.22 Special Care High
LE2 1.61 Special Care Low
LE1 1.26 Special Care Low
LD2 1.54 Special Care Low
LD1 1.21 Special Care Low
LC2 1.30 Special Care Low
LC1 1.02 Special Care Low
LB2 1.21 Special Care Low
LB1 0.95 Special Care Low
CE2 1.39 Clinically Complex
CE1 1.25 Clinically Complex
CD2 1.29 Clinically Complex
CD1 1.15 Clinically Complex
CC2 1.08 Clinically Complex
CC1 0.96 Clinically Complex
CB2 0.95 Clinically Complex
CB1 0.85 Clinically Complex
CA2 0.73 Clinically Complex
CA1 0.65 Clinically Complex
BB2 0.81 Behavioral Symptoms
Plus Cognitive
Performance
BB1 0.75 Behavioral Symptoms
Plus Cognitive
Performance
BA2 0.58 Behavioral Symptoms
Plus Cognitive
Performance
BA1 0.53 Behavioral Symptoms
Plus Cognitive
Performance
PE2 1.25 Reduced Physical
Function
PE1 1.17 Reduced Physical
Function
PD2 1.15 Reduced Physical
Function
PD1 1.06 Reduced Physical
Function
PC2 0.91 Reduced Physical
Function
PC1 0.85 Reduced Physical
Function
PB2 0.70 Reduced Physical
Function
PB1 0.65 Reduced Physical
Function
PA2 0.49 Reduced Physical
Function
PA1 0.45 Reduced Physical
Function
(b) Average case-mix score
The Department of Disabilities, Aging and
Independent Living’s Division of Licensing
and Protection shall compute each facility’s
average case-mix score.
(1) The Division of Licensing and
Protection shall periodically, but no less
frequently than quarterly, certify to the
Division of Rate Setting the average case-
mix score for those residents of each
facility whose room and board (excluding
resident share) is paid for solely by the
Medicaid program.
(2) For the Base Year, the Division of
Licensing and Protection shall certify the
average case-mix score for all residents.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -27- DIVISION OF RATE SETTING
(c) Nursing Care cost per case-mix point.
Each facility’s Nursing Care cost per case-
mix point will be calculated as follows:
(1) Using each facility’s Base Year cost
report, the total allowable Nursing Care
costs shall be determined in accordance
with Subsection 6.2.
(2) Each facility’s Standardized Resident
Days shall be computed by multiplying
total Base Year resident days by that
facility’s average case-mix score for all
residents for the four quarters of the cost
reporting period under review.
(3) The per diem nursing care cost per case-
mix point shall be computed by dividing
total Nursing Care costs by the Base Year
Standardized Resident Days for that Base
Year.
(d) Per diem limits on the Base Year
allowable Nursing Care rate per case-mix
point:
(1) The Division shall array all nursing
care facilities’ allowable Base Year per
diem Nursing Care costs per case-mix
point, excluding those for state nursing
facilities and nursing facilities that are no
longer in the Medicaid program at the time
the limits are set, from low to high. These
costs shall be limited to the cost at the
ninetieth percentile, calculated using the
percentile spreadsheet function.
(2) Each facility’s Base Year Nursing Care
rate per case-mix point shall be the lesser of
the limit in subparagraph (1) or the
facility’s allowable Nursing Care cost per
case-mix point.
7.3 Resident Care Base Year Rate
Resident Care Base Year rates shall be
computed as follows:
(a) Using each facility’s Base Year cost
report, the provider’s Base Year total
allowable Resident Care costs shall be
determined in accordance with Subsection
6.3.
(b) The Base Year per diem allowable
Resident Care costs for each facility shall be
calculated by dividing the Base Year total
allowable Resident Care costs by total Base
Year resident days.
(c) The Division shall array all nursing
facilities’ Base Year per diem allowable
Resident Care costs, excluding those for state
nursing facilities and nursing facilities that
are no longer in the Medicaid program at the
time the limits are set, from low to high and
identify the median.
(d) The per diem limit shall be the median
plus five percent.
(e) Each facility’s Base Year Resident Care
per diem rate shall be the lesser of the limit
set in paragraph (d) or the facility’s Base
Year per diem allowable Resident Care costs.
7.4 Indirect Base Year Rate
Indirect Base Year rates shall be computed as
follows:
(a) Using each facility’s Base Year cost
report, each provider’s Base Year total
allowable Indirect costs shall be determined
in accordance with Subsection 6.4.
(b) The Base Year per diem allowable
Indirect costs for each facility shall be
calculated by dividing the Base Year total
allowable Indirect costs by total Base Year
resident days.
(c) The Division shall array all nursing
facilities’ Base Year per diem allowable
Indirect costs, excluding those for state
nursing facilities and nursing facilities that
are no longer in the Medicaid program at the
time the limits are set, from low to high and
identify the median.
(d) The per diem limit shall be set as follows:
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -28- DIVISION OF RATE SETTING
(1) For special hospital-based nursing
facilities, the limit shall be 137 percent of
the median.
(2) For all other privately-owned nursing
facilities, the limit shall be the median plus
five percent.
(e) Each provider’s Base Year Indirect per
diem rate shall be the lesser of the limit in
paragraph (d) or the facility’s Base Year per
diem allowable Indirect costs.
7.5 Director of Nursing Base Year Rate
The Director of Nursing Base Year per diem
rates shall be computed as follows:
(a) Using each facility’s Base Year cost
report, total allowable Base Year Director of
Nursing costs shall be determined in
accordance with Subsection 6.5.
(b) Each facility’s Base Year per diem
allowable Director of Nursing costs shall be
calculated by dividing the Base Year total
allowable Director of Nursing costs by total
Base Year resident days.
(c) The Director of Nursing per diem rate
shall be the facility’s Base Year per diem
allowable Director of Nursing costs
calculated pursuant to this subsection.
7.6 Ancillary Services Rate
(a) The Ancillary per diem rate shall be
computed as follows:
(1) Medicaid Ancillary costs shall be
determined in accordance with subsection
6.7.
(2) Using each facility’s most recently
settled cost report, the per diem Ancillary
rate shall be the sum of the following per
diem costs calculated as follows:
(i) Costs for therapy services per diem,
including IV therapy, shall be calculated
by dividing allowable Medicaid costs by
the number of related Medicaid resident
days less Medicaid hold days.
(ii) Dialysis transportation costs per diem
shall be calculated by dividing the
allowable costs for Vermont Medicaid
residents by the number of Vermont
Medicaid resident days less Vermont
Medicaid hold days.
(iii) Costs for medical supplies, over-the-
counter drugs, and incontinent supplies
and personal care items per diem shall be
calculated by dividing allowable costs, by
total resident days less hold days.
(b) Any change to the Ancillary per diem rate
shall be implemented at the time of the first
quarterly case-mix rate recalculation after the
cost report is settled.
7.7 Property and Related Per Diem
The Property and Related per diem rate shall
be computed as follows:
(a) Using each facility’s most recently settled
annual cost report, total allowable Property
and Related costs shall be determined in
accordance with Subsection 6.6.
(b) Using each facility’s most recently settled
cost report, the per diem property and related
costs shall be calculated by dividing
allowable property and related costs by total
resident days. Any change to the property
and related per diem rate shall be
implemented at the time of the first quarterly
case-mix rate recalculation after the cost
report is settled.
7.8 Limits Final
Once a final order has been issued for all
facilities’ Base Year cost reports,
notwithstanding any subsequent changes to
the cost report findings, resulting from a
reopening, appeal, or other reason, the limits
set pursuant to subsections 7.2(d)(2), 7.3(d),
and 7.4(d) will not change until nursing
home costs are rebased pursuant to 5.6(b),
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -29- DIVISION OF RATE SETTING
except for annual adjustment by the inflation
factors or a change in law necessitating such
a change.
8 ADJUSTMENTS TO RATES
8.1 Change in Services
The Division, on application by a provider,
may make an adjustment to the prospective
case-mix rate for additional costs which are
directly related to:
(a) a new health care project previously
approved under the provisions of 18 V.S.A.
§9434. Costs greater than those approved in
the Certificate of Need (as adjusted for
inflation) will not be considered when
calculating such an adjustment,
(b) a change in services, facility, or new
health care project not covered under the
provisions of 18 V.S.A. §9434, if such a
change has previously been approved by the
Division, or
(c) with the prior approval of the Division, a
reduction in the number of licensed beds.
8.2 Change in Law
The Division may make or a provider may
apply for an adjustment to a facility’s
prospective case-mix rate for additional costs
that are a necessary result of complying with
changes in applicable federal and state laws,
and regulations, or the orders of a State
agency that specifically requires an increase
in staff or other expenditures.
8.3 Facilities in Receivership
(a) The Division, on application by a receiver
appointed pursuant to state or federal law,
may make an adjustment to the prospective
case-mix rate of a facility in receivership for
the reasonable and necessary additional costs
to the facility incurred during the
receivership.
(b) On the termination of the receivership,
the Division shall recalculate the prospective
case-mix rate to eliminate this adjustment.
8.4 Efficiency Measures
The Division, on application by a provider,
may make an adjustment to a prospective
case-mix rate for additional costs which are
directly related to the installation of energy
conservation devices or the implementation
of other efficiency measures, if they have
been previously approved by the Division.
8.5 Interest Rates
(a) A provider may apply for an adjustment
to the Property and Related rate, or the
Division may initiate an adjustment if there
are cumulative interest rate increases or
decreases of more than one-half of one
percentage point because of existing
financing agreements with a balloon payment
or a refinancing clause that forces a mortgage
to be refinanced at a different interest rate, or
because of a variable rate of adjustable rate
mortgages.
(b) A provider with an interest rate
adjustment shall notify the Division of any
change in the interest rate within 10 days of
its receipt of notice of that change. The
Division may rescind all interest rate
adjustments of any facility failing to file a
timely notification pursuant to this subsection
for a period of up to two years.
8.6 Emergencies and Unforeseeable
Circumstances
(a) The Division, on application by a
provider, may make an adjustment to the
prospective case-mix rate under emergencies
and unforeseeable circumstances, such as
damage from fire or flood.
(b) Providers must carry sufficient insurance
to address adequately such circumstances.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -30- DIVISION OF RATE SETTING
8.7 Procedures and Requirements for Rate
Adjustments
(a) Application for a rate adjustment pursuant
to this section should be made as follows.
Approval of any application for a rate
adjustment under this section is at the sole
discretion of the Director.
(b) Except for applications made pursuant to
subsection 4.11, no application for a rate
adjustment should be made if the change to
the rate would be smaller than one percent of
the rate in effect at the time.
(c) Application for a Rate Adjustment shall
be made on a form prescribed by the Director
and filed with the Division and shall be
accompanied by all documents and proofs
determined necessary for the Division to
make a decision.
(d) The burden of proof is at all times on the
provider to show that the costs for which the
adjustment has been requested are
reasonable, necessary and related to resident
care.
(e) The Division may grant or deny the
Application, or make an adjustment
modifying the provider’s proposal. If the
materials filed by the provider are inadequate
to serve as a basis for a reasonable decision,
the Division shall deny the Application,
unless additional proofs are submitted.
(f) The Division shall not be bound in
considering other Applications, or in
determining the allowability of reported
costs, by any prior decision made on any
Application under this section. Such
decisions shall have no precedential value
either for the applicant facility or for any
other facility. Principles and decisions of
general applicability shall be issued as a
Division practice or procedure, pursuant to
Section 1.8(d).
(g) For adjustments requiring prior approval
of the Division, such approval should be
sought before the provider makes any
commitment to expenditures. An Application
for Prior Approval is subject to the same
requirements as an Application for a Rate
Adjustment under this section.
(h) Rate adjustments made under this section
shall be effective from the first day of the
quarter following the date of the final order
on the application or following the date the
assets are actually put into service, whichever
is the later, or, at the discretion of the
Division, the first day of the quarter
immediately preceding the final order and
may be continued, at the discretion of the
Division, notwithstanding a general rebase of
costs. Costs which are the basis for a
continuing rate adjustment shall not be
included in the cost categories used as the
basis for the other rate components.
(i) The Division may require an applicant for
a rate adjustment under this section or under
subsection 4.11 to file a budget cost report in
support of its application.
(j) When determined to be appropriate by the
Division, a budget rate may be set for the
facility according to the procedures in and
subject to the provisions of subsection 5.9.
Appropriate cases may include, but are not
limited to, changes in the number of beds, an
addition to the facility, or the replacement of
existing property.
(k) In calculating an adjustment under this
section and subsection 4.11, the Division
may take into account the effect of such
changes on all the cost categories of the
facility.
(l) A revision may be made prospectively to
a rate adjustment under this section and
subsection 4.11 based on a "look-back"
which will be computed based on a
provider’s actual allowable costs.
(m) In this subsection “additional costs”
means the incremental costs of providing
resident care directly and proximately caused
by one of the events listed in this section or
subsection 4.11. Increases in costs resulting
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -31- DIVISION OF RATE SETTING
from other causes will not be recognized. It is
not intended that this section be used to
effect a general rebase in a facility’s costs.
8.8 Limitation on Availability of Rate
Adjustments
Providers may not apply for a rate adjustment
under this section for the sole reason that
actual costs incurred by the facility exceed
the rate of payment.
9 PRIVATE NURSING FACILITY AND
STATE NURSING FACILITY RATES
The Medicaid per diem payment rates for
nursing home services are calculated
according to this section as follows:
9.1 Nursing Facility Rate Components
The per diem rate of reimbursement consists
of the following rate components:
(a) Nursing Care
(b) Resident Care
(c) Indirect
(d) Director of Nursing
(e) Property and Related
(f) Ancillaries
(g) Adjustments (if any)
9.2 Calculation of the Total Rate
The total per diem rate in effect for any
nursing facility shall be the sum of the rates
calculated for the components listed in
Subsection 9.1, adjusted in accordance with
the Inflation Factors, as described in
Subsection 5.8.
9.3 Updating Rates for a Change in the
Average Case-Mix Score
(a) The Nursing Care rate component shall be
updated quarterly, on the first day of January,
April, July and October, for changes in the
average case-mix score of the facility’s
Medicaid residents.
(b) The Nursing Care rate component and
any part of a Section 8 adjustment that
reimburses nursing costs are updated for a
change in the average case-mix score for the
facility’s Medicaid residents. The update is
calculated as follows:
(1) The Nursing Care rate component (or
rate adjustment) in the current rate of
reimbursement for a facility is divided by
the average case-mix score used to
determine the current Nursing Care rate
component. This quotient is the current
Nursing Care rate per case-mix point.
(2) The current Nursing Care rate
component (or rate adjustment) per case-
mix point is multiplied by the new average
case-mix score. This product is the new
Nursing Care rate component (or rate
adjustment).
(c) the Division may use an average of the
case-mix scores from the two most recent
available quarters having complete case-mix
score data if nursing facilities are temporarily
exempt from any part of the standard
minimum data set (MDS) reporting
requirements by CMS as a result of the
National Health Emergency declared in
response to the COVID-19 pandemic and do
not submit updated or complete MDS data to
the Department of Disabilities, Aging and
Independent Living.
9.4 State Nursing Facilities
(a) Notwithstanding any other provisions of
these rules, payment rates for state nursing
facilities shall be determined retrospectively
by the Division based on the reasonable and
necessary costs of providing those services as
determined using the cost reporting and cost
finding principles set out in sections 3 and 4
of these rules.
(b) Until such time as the cost report is
settled, the Division shall set an interim rate
based on an estimate of the facility’s costs
and census for the rate year.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -32- DIVISION OF RATE SETTING
(c) After reviewing the facility’s cost report,
the Division shall set a final rate for the fiscal
year based on the facility’s allowable costs. If
there has been an under payment for the
period the difference shall be paid to the
facility. If there has been an overpayment the
excess payments shall be recouped.
(d) At no time shall the final rates paid to
State nursing facilities exceed the upper
limits established in 42 C.F.R. §447.272.
9.5 Quality Incentives
Certain awards shall be made annually to
facilities that provide a superior quality of
care in an efficient and effective manner.
(a) These payments will be based on:
(1) objective standards of quality, which
shall include resident satisfaction surveys,
to be determined by the Department of
Disabilities, Aging and Independent Living,
and
(2) objective standards of cost efficiency
determined by the Division.
(b) Supplemental payments will not be
available under this subsection for any
facility that does not participate in the
statewide resident satisfaction survey
program.
(c) Supplemental payments shall be
expended by the provider to enhance the
quality of care provided to Medicaid eligible
residents. In determining the nature of these
expenditures, the provider shall consult with
the facility’s Resident Council.
(d) The amount and method of distribution of
the quality incentive payments shall be as
follows:
(1) The quality incentive payments shall be
made from a pool. The annual size of the
pool shall be based on the amount of
$25,000 times the number of facilities
meeting the award criteria, up to a
maximum of five.
(2) The pool shall be distributed among the
qualifying facilities, awarding each
qualifying facility a share of the pool based
on the ratio of its Medicaid days to the total
Medicaid days for all the qualifying
facilities.
(e) Award Criteria
The following criteria will be applied to
facility data up to March 31 each year to
determine eligibility for the award to be
presented in May. In order to be eligible for
the award, a facility must participate in the
Vermont Medicaid program and meet all of
the following criteria. All eligible facilities
will be ranked according to their quality of
care by the Department of Disabilities,
Aging and Independent Living based on
these basic quality criteria. The five
facilities with the highest quality of care
will receive an award. If, based on the
basic criteria, there are ties which would
cause more than five facilities to be equally
qualified, the tied facilities will be ranked
according to the efficiency criteria set out
below in paragraph (6), to determine those
facilities that will receive an award.
(1) The most recent health survey report
resulted in a score of five or less, no
deficiency with a scope and severity greater
than “D” level, with no more than two “D”
level deficiencies in the general categories
of Quality of Care, Quality of Life, or
Resident Rights.
(2) No substantiated complaints since the
most recent survey and prior full health
survey related to quality of care, quality of
life, or residents’ rights.
(3) Participation in Advancing Excellence
in America’s Nursing Homes campaign.
(4) Resident satisfaction survey results
above the statewide average.
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -33- DIVISION OF RATE SETTING
(5) Fire Safety deficiency score of 5 or less
with scope and severity less than “E” in the
most recent full survey.
(6) The efficiency rankings shall be based
upon the allowable costs per day from each
facility’s most recently settled Medicaid
cost report. Cost per day will be calculated
using actual resident days for the same
fiscal period.
10 EXTRAORDINARY FINANCIAL RELIEF
10.1 Objective
In order to protect Medicaid recipients from
the closing of a nursing facility in which
they reside and to provide financial relief to
nursing facilities in response to the State of
Emergency declared by the Governor of the
State of Vermont on March 13, 2020 related
to the COVID-19 outbreak, this section
establishes a process by which nursing
homes facilities that are in immediate
danger of failure or that are experiencing
unexpected financial burdens related to
COVID-19 may seek extraordinary financial
relief. This process does not create any
entitlement to rates in excess of those
required by 33 V.S.A. Chapter 9 or to any
other form of relief.
10.2 Nature of the Relief
(a) Based on the individual circumstances of
each case, the Director may recommend any
of the following on such financial,
managerial, quality, operational or other
conditions as she or he shall find appropriate:
a rate adjustment, an advance of Medicaid
payments, other relief appropriate to the
circumstances of the applicant, or no relief.
(b) The Director’s Recommendation shall be in
writing and shall state the reasons for the
Recommendation. The Recommendation shall be
a public record.
(c) The Recommendation shall be reviewed
by the SecretaryCommissioner of the
Department of Vermont Health Access who
shall make a Final Decision, which shall not
be subject to administrative or judicial
review.
(d) In those cases where the Division
determines that financial relief may be
appropriate, such relief may be implemented
on an interim basis pending a Final Decision
by the SecretaryCommissioner. The interim
financial relief shall be taken into account in
the Division’s Recommendation to the
SecretaryCommissioner and in the
Secretary’s Commissioner’s Final Decision.
10.3 Criteria to be Considered by the
Division
(a) Before a provider may apply for
extraordinary financial relief, its financial
condition must be such that there is a
substantial likelihood that it will be unable to
continue in existence in the immediate future
or that the relief sought is a result of
unexpected costs associated with the
COVID-19 State of Emergency.
(b) The following factors will be considered
by the Director in making the
Recommendation to the Secretary
Commissioner:
(1) the likelihood of the facility’s closing
without financial assistance,
(2) the inability of the applicant to pay bona
fide debts,
(3) the potential availability of funds from
related parties, parent corporations, or any
other source,
(4) the ability to borrow funds on
reasonable terms,
(5) the existence of payments or transfers
for less than adequate consideration,
(6) the extent to which the applicant’s
financial distress is beyond the applicant’s
control,
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -34- DIVISION OF RATE SETTING
(7) the extent to which the applicant can
demonstrate that assistance would prevent,
not merely postpone the closing of the
facility,
(8) the extent to which the applicant’s
financial distress has been caused by a
related party or organization,
(9) the quality of care provided at the
facility,
(10) the continuing need for the facility’s
beds,
(11) the age and condition of the facility,
(12) other factors found by the Director to
be material to the particular circumstances
of the facility, and
(13) the ratio of individuals receiving care
in a nursing facility to individuals receiving
home- and community-based services in the
county in which the facility is located.
10.4 Procedure for Application
(a) An Application for Extraordinary
Financial Relief shall be filed with the
Division according to procedures to be
prescribed by the Director.
(b) The Application shall be in writing and
shall be accompanied by such documentation
and proofs as the Director may prescribe. The
burden of proof is at all times on the
provider. If the materials filed by the
provider are inadequate to serve as a basis for
a reasoned recommendation, the Division
shall deny the Application, unless additional
proofs are submitted.
(c) The Secretary Commissioner shall not be
bound in considering other Applications by
any prior decision made on any Application
under this section. Such decisions shall have
no precedential value either for the applicant
facility or for any other facility.
11 PAYMENT FOR OUT-OF-STATE
PROVIDERS
11.1 Long-Term Care Facilities Other Than
Rehabilitation Centers
Payment for services, other than
Rehabilitation Center services, provided to
Vermont Medicaid residents in long-term
care facilities in another state shall be at the
per diem rate established for Medicaid
payment by the appropriate agency in that
state. Payment of the per diem rate shall
constitute full and final payment, and no
retroactive settlements will be made.
11.2 Rehabilitation Centers
(a) Payment for prior-authorized
Rehabilitation Center services provided in
nursing facilities located outside Vermont for
the severely disabled, such as head injured or
ventilator dependent people, will be made at
the lowest of:
(1) the amount charged; or
(2) the Medicaid rate, including ancillaries
as paid by at least one other state agency in
CMS Region I.
(b) Payment for Rehabilitation Center
services which have not been prior
authorized by the Commissioner of the
Department of Vermont Health Access or a
designee will be made according to
Subsection 11.1.
11.3 Pediatric Care
No Medicaid payments will be made for
services provided to Vermont pediatric
residents in out-of-state long-term care
facilities without the prior authorization of
the Commissioner of the Department of
Vermont Health Access.
12 RATES FOR ICF/MRS
12.1 Reasonable Cost Reimbursement
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -35- DIVISION OF RATE SETTING
Intermediate Care Facilities for the Mentally
Retarded (ICF/MRs) are paid according to
Medicaid principles of reimbursement,
pursuant to the Regulations Governing the
Operation of Intermediate Care Facilities for
the Mentally Retarded adopted by the
Agency.
12.2 Application of these Rules to ICF/MRS
The Division’s Accounting Requirements
(Section 2) and Financial Reporting (Section
3) shall apply to this program.
13 RATES FOR SWING BEDS AND OTHER
LONG-TERM CARE SERVICES IN
HOSPITALS
Payment for swing-bed and other long-term
care services provided by hospitals, pursuant
to 42 U.S.C. §1396l(a), shall be made at a
rate equal to the average rate per diem during
the previous calendar year under the State
Plan to nursing facilities located in the State
of Vermont. Supplemental payments made
pursuant to section 14 and subsection 9.5
shall not be included in the calculation of
swing-bed rates.
14 SPECIAL RATES FOR CERTAIN
INDIVIDUAL RESIDENTS
14.1 Availability of Special Rates for
Individuals with Unique Physical
Conditions
(a) In rare and exceptional circumstances, a
special rate shall be available for the care of
an individual eligible for the Vermont
Medicaid program whose unique physical
conditions makes it otherwise extremely
difficult to obtain appropriate long-term care.
(b) A special rate under this subsection is
available subject to the conditions set out
below.
(c) Required Findings. Before a rate is
payable under this section:
(1) the Commissioner of the Department of
Vermont Health Access, in consultation
with the Department’s Medical Director,
and the Director of Adult Services
Division, must make a written finding that
the individual’s care needs meet the
requirements of this section and that the
proposed placement is appropriate for that
individual’s needs; and
(2) the Division of Rate Setting, in
consultation with the Commissioner of the
Department of Vermont Health Access and
the Commissioner of the Department of
Disabilities, Aging and Independent Living,
must determine that the special rate,
calculated pursuant to paragraph (e) of this
subsection, is reasonable for the services
provided.
(d) Plan of Care:
(1) Before an individual can be placed with
any facility and a rate established, pursuant
to this subsection, a plan of care for that
person must be approved by the Director of
Adult Services Division and the Medical
Director of the Department of Vermont
Health Access.
(2) The facility shall submit the resident’s
assessment and plan of care for review by
the Director of Adult Services Division and
the Medical Director of the Department of
Vermont Health Access whenever there is a
significant change in the resident’s
condition, but in no case less frequently
than every six months. This review shall
form the basis for a determination that the
payment of the special rate should be
continued or revised pursuant to 14.1(e)(2).
(e) Calculation of the Special Rate:
(1) A per diem rate shall be set by the
Division based on the budgeted allowable
costs for the individual’s plan of care. The
rate shall be exempt from the limits in
section 7 of these rules.
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(2) From time to time the special rate may
be revised to reflect significant changes in
the resident’s assessment, care plan, and
costs of providing care. The Division may
adjust the special rate retroactively based
on the actual allowable costs of providing
care to the resident.
(3) Special rates set under this section shall
not affect the facility’s normal per diem
rate. The case-mix weight of any resident
on whose behalf a special rate is paid shall
not be included in the calculation of the
facility’s average case-mix score pursuant
to subsection 7.2(b), but the days of care
shall be included in the facility’s Medicaid
days and total resident days. The provider
shall track the total costs of providing care
to the resident and shall self-disallow the
incremental cost of such care on cost
reports covering the period during which
the facility receives Medicaid payments for
services to the resident.
14.2 Special Rates for Certain Former
Patients of the Vermont State Hospital
(a) A special rate is available for nursing
home services to patients transferred directly
from the Vermont State Hospital or to such
other similarly situated individuals as the
Commissioner of Mental Health shall
approve. The rate shall be prospective and
shall be set before admission of the
individual to the facility.
(1) The special rate payable for each
individual shall consist of the current per
diem rate for the receiving facility as
calculated pursuant to Sections 5 to 9 of
these rules and a monthly supplemental
incentive payment. Three levels of
supplemental payments are available for the
care of residents meeting the eligibility
criteria in this subsection based on the
severity of the resident’s condition and the
resources needed to provide care.
(2) The supplemental payment will
continue to be paid as long as the criteria in
paragraph (c) are satisfied.
(b) To be eligible for a special rate, the
receiving facility must have in place a plan of
care developed in conjunction with and
approved by the Commissioner of Mental
Health and the Division of Licensing and
Protection.
(c) Criteria for continuation of supplemental
payments:
(i) The transferred person continues to
reside at the receiving facility.
(ii) The facility documents to the
satisfaction of the Division of Licensing
and Protection that the transferred person
continues to present significant behavior
management problems by exhibiting
behaviors that are significantly more
challenging than those of the general
nursing facility population.
(d) Any advance payments for days during
which the transferred person is not resident
or ceases to be eligible for the special
transitional rate will be treated as
overpayments and subject to refund by
deductions from the provider’s Medicaid
payments.
14.3 Special Rates for Medicaid Eligible
Furloughees of the Department of
Corrections
A special rate equal to 150 percent of a
nursing facility’s ordinary Medicaid rate
shall be paid for care provided to Medicaid
eligible furloughees of the Department of
Corrections.
15 ADMINISTRATIVE REVIEW AND
APPEALS
15.1 Draft Findings and Decisions
(a) Before issuing findings on any Desk
Review, Audit of a Cost Report, or decision
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on any application for a rate adjustment, the
Division shall serve a draft of such findings
or decision on the affected provider. If the
Division makes no adjustment to a facility’s
reported costs or application for a rate
adjustment, the Division’s findings shall be
final and shall not be subject to appeal under
this section.
(b) The provider shall review the draft upon
receipt. If it desires to review the Division’s
work papers, it shall file, within 10 days, a
written Request for Work Papers on a form
prescribed by the Director.
15.2 Request for an Informal Conference on
Draft Findings and Decisions
(a) Within 15 days of receipt of either the
draft findings or decision or requested work
papers, whichever is the later, a provider that
is dissatisfied with the draft findings or
decision issued pursuant to Subsection
15.1(a) may file a written Request for an
Informal Conference with the Division’s staff
on a form prescribed by the Director.
(b) Within 10 days of the receipt of the
Request, the Division shall contact the
provider to arrange a mutually convenient
time for the informal conference, which shall
be held within 45 days of the receipt of the
Request at the Division. The informal
conference may be held by telephone. At the
conference, if necessary, a date certain shall
be fixed by which the provider may file
written submissions or other additional
necessary information. Within 20 days
thereafter, the Division shall issue its official
agency action.
(c) A Request for an Informal Conference
must be pursued before a Request for
Reconsideration can be filed pursuant to
Subsection 15.3. Issues not raised in the
Request for Informal Conference shall not be
raised at the informal conference or in any
subsequent proceeding arising from the same
action of the Division, including appeals
pursuant to 33 V.S.A. §909.
(d) Should no timely Request for an Informal
Conference be filed within the time period
specified in Subsection 15.2(a), the
Division’s draft findings and/or decision are
final and no longer subject to administrative
review or judicial appeal.
15.3 Request for Reconsideration
(a) A provider that is aggrieved by an official
action issued pursuant to Subsection 15.2(b)
may file a Request for Reconsideration.
(b) A Request for Reconsideration must be
pursued before an appeal can be taken
pursuant to 33 V.S.A. 909(a).
(c) The Request for Reconsideration must be
in writing, on a form prescribed by the
Director, and filed within 30 days of the
provider’s receipt of the official action.
(d) Within 10 days of the filing of a Request
for Reconsideration, the provider must file
the following:
(1) A request for a hearing, if desired;
(2) A clear statement of the alleged errors
in the Division’s action and of the remedy
requested including: a description of the
facts on which the Request is based, a
memorandum stating the support for the
requested relief in this rule, CMS-15, or
other authority for the requested relief and
the rationale for the requested remedy; and
(3) If no hearing is requested, evidence
necessary to bear the provider’s burden of
proof, including, if applicable, a proposed
revision of the Division’s calculations, with
supporting work papers.
(e) Issues not raised in the Request for
Reconsideration shall not be raised later in
this proceeding or in any subsequent
proceeding arising from the same action of
the Division, including appeals pursuant to
33 V.S.A. §909.
(f) If a hearing is requested, within 10 days
of the receipt of the Request for
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Reconsideration, the Division shall contact
the provider to arrange a mutually agreeable
time.
(g) The hearing shall be conducted by the
Director or her or his designee. The
testimony shall be under oath and shall be
recorded either stenographically or on tape. If
the provider so requests, the Division staff
involved in the official action appealed shall
appear and testify. The Director, or her or his
designee, may hold the record open to a date
certain for the receipt of additional materials.
(h) The Director shall issue a Final Order on
Request for Reconsideration no later than 30
days after the record closes. Pending the
issuance of a final order, the official action
issued pursuant to subsection 15.2(b) shall be
used as the basis for setting an interim rate
from the first day of the calendar quarter
following its issuance. Final orders shall be
effective from the effective date of the
official action.
(i) Proceedings under this section are
not subject to the requirements of 3
V.S.A. Chapter 25.
15.4 Appeals from Final Orders of the
Division
(a) Within 30 days of the date thereof, a
nursing facility aggrieved by a Final Order of
the Division may file an appeal pursuant to
33 V.S.A. §909(a) and Subsections 15.5,
15.6 and 15.7 of this rule.
(b) Within 30 days of the date thereof, a ICF/
MR aggrieved by a Final Order of the
Division may file an appeal using the
following procedures. Proceedings under this
paragraph are not subject to the requirements
of 3 V.S.A. Chapter 25.
(1) Request for Administrative Review by
the Commissioner of Mental Health. The
Commissioner or a designee shall review
a final order of the Division of Rate
Setting if a timely request is filed with the
Director of the Division.
(i) Within 10 days of the receipt of
the Request, the Director shall
forward to the Commissioner a
copy of the Request for
Administrative Review and the
materials that represent the
documentary record of the
Division’s action.
(ii) The Commissioner or the
designee shall review the record of
the appeal and may request such
additional materials as they shall
deem appropriate, and shall, if
requested by the provider, convene
a hearing on no less than 10 days
written notice to the provider and
the Division. Within 45 days after
the close of the record, the
Commissioner or the designee shall
issue a decision which shall be
served on the provider and the
Division.
(2) Appeal to the Secretary of Human
Services. Within 20 days of the date of the
date of issuance, an ICF/MR aggrieved by
the Commissioner’s decision, may appeal
to the Secretary.
(i) The Notice of Appeal shall be filed
with the Commissioner, who, within 10
days of the receipt of the Notice, shall
forward to the Secretary a copy of the
Notice and the record of the
Administrative Review.
(ii) The Secretary or his designee shall
review the record of the Administrative
Review and may, within their sole
discretion, hold a hearing, request more
documentary information, or take such
other steps to review the Commissioner’s
decision as shall seem appropriate.
(iii) Within 60 days of the filing of the
Notice of Appeal or the closing of the
record, whichever is the later, the
Secretary or the designee shall issue a
Final Determination.
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(3) Further review of the Final
Determination is available only pursuant to
Rule 75 of the Vermont Rules of Civil
Procedure.
15.5 Request for Administrative Review to
the Secretary of Human Services
pursuant to 33 V.S.A. §909(a)(3)
(a) No appeal may be taken under this section
when the remedy requested is retrospective
relief from the operation of a provision of
this rule or such other relief as may be
outside the power of the Secretary to order.
Such relief may be pursued by an appeal to
the Vermont Supreme Court or Superior
Court pursuant to 33 V.S.A. §909(a)(1) and
(2), or prospectively by a request for
rulemaking pursuant 3 V.S.A. §806.
(b) Appeals under this section shall be
governed by the relevant provisions of the
Administrative Procedures Act, 3 V.S.A.
§§809-815.
(c) Proceedings under this section shall be
initiated by filing two copies of a written
Request for Administrative Review with the
Division, on forms prescribed therefor.
(d) Within 5 days of receipt of the Request,
the Director shall forward one copy to the
Secretary. Within 10 days thereafter, the
Secretary shall designate an independent
appeals officer who shall be a registered or
certified public accountant. The Letter of
Designation shall be served on all parties to
the appeal. All documents filed thereafter
shall be filed directly with the independent
appeals officer and copies served on all
parties.
(e) Within 10 days of the designation of an
independent appeals officer, the Division
shall forward to him or her those materials
that represent the documentary record of the
Division’s action.
(f) Within 30 days thereafter, the independent
appeals officer shall, on reasonable notice to
the parties, convene a prehearing conference
(which may be held by telephone) to consider
such matters as may aid in the efficient
disposition of the case, including but not
limited to:
(1) the simplification of the issues,
(2) the possibility of obtaining stipulations
of fact and/or admissions of documents
which will avoid unnecessary proof,
(3) the appropriateness of prefiled
testimony,
(4) a schedule for the future conduct of the
case.
The independent appeals officer shall make
an order which recites the action taken at the
conference, including any agreements made
by the parties.
(g) The independent appeals officer shall
hold a hearing, pursuant to 3 V.S.A. §809, on
no less than 10 days written notice to the
parties, according to the schedule determined
at the prehearing conference. The
independent appeals officer shall have the
power to subpoena witnesses and documents
and administer oaths. Testimony shall be
under oath and shall be recorded either
stenographically or on tape. Prefiled
testimony, if admitted into evidence, shall be
included in the transcript, if any, as though
given orally at the hearing. Evidentiary
matters shall be governed by 3 V.S.A. §810.
(h) The independent appeals officer may
allow or require each party to file Proposed
Findings of Fact which shall contain a
citation to the specific part or parts of the
record containing the evidence upon which
the proposed finding is based. The Proposed
Findings shall be accompanied by a
Memorandum of Law which shall address
each matter at issue.
(i) Within 60 days after the date of the
hearing, or after the filing of Proposed
Findings of Fact, whichever is the later, the
independent appeals officer shall file with the
Secretary a Recommendation for Decision, a
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copy of which shall be served on each of the
parties. The Recommendation for Decision
shall include numbered findings of fact and
conclusions of law, separately stated, and a
proposed order. If a party has submitted
Proposed Findings of Fact, the
Recommendation for Decision shall include a
ruling upon each proposed finding. Each
party’s Proposed Findings and Memorandum
of Law shall accompany the
Recommendation.
(j) At the time the independent appeals
officer makes her or his Recommendation,
she or he shall transmit the docket file to the
Secretary. The Secretary shall retain the file
for a period of at least one year from the date
of the Final Determination in the docket. In
the event of an appeal of the Secretary’s
Final Determination to the Vermont Supreme
Court or to Superior Court, the Secretary
shall make disposition of the file as required
by the applicable rules of civil and appellate
procedure.
(k) Any party aggrieved by the
Recommendation for Decision may file
Exceptions, Briefs, and if desired, a written
Request for Oral Argument before the
Secretary. These submissions shall be filed
with the Secretary within 15 days of the date
of the receipt of a copy of the
Recommendation and copies served on all
other parties.
(l) If oral argument is requested, within 20
days of the receipt of the Request for Oral
Argument, the Secretary shall arrange with
the parties a mutually convenient time for a
hearing.
(m) Within 45 days of the receipt of the
Recommendation or the hearing on oral
argument, whichever is the later, the
Secretary shall issue a Final Determination
which shall be served on the parties.
(n) A party aggrieved by a Final
Determination of the Secretary may obtain
judicial review pursuant to 33 V.S.A.
§909(a)(1) and (2) and Subsections 15.6 and
15.7 of this Rule.
15.6 Appeal to Vermont Supreme Court
pursuant to 33 V.S.A. §909(a)(1)
Proceedings under this section shall be
initiated, pursuant to the Vermont Rules of
Appellate Procedure, as follows:
(a) by filing a Notice of Appeal from a Final
Order with the Division; or
(b) by filing a Notice of Appeal from a Final
Determination with the Secretary.
15.7 Appeal to Superior Court pursuant to
33 V.S.A. §909(a)(2)
De novo review is available in the Superior
Court of the county where the nursing facility
is located. Such proceedings shall be
initiated, pursuant to Rule 74 of the Vermont
Rules of Civil Procedure, as follows:
(a) by filing a Notice of Appeal from a Final
Order with the Division; or
(b) by filing a Notice of Appeal from a Final
Determination with the Secretary.
15.8 Settlement Agreements
The Director may agree to settle reviews and
appeals taken pursuant to Subsections 15.3
and 15.5, and, with the approval of the
Secretary, may agree to settle other appeals
taken pursuant to 33 V.S.A. §909 and any
other litigation involving the Division on
such reasonable terms as she or he may deem
appropriate to the circumstances of the case.
16 DEFINITIONS AND TERMS
For the purposes of these rules the following
definitions and terms are used:
Accrual Basis of Accounting: an accounting
system in which revenues are reported in the
period in which they are earned, regardless of
when they are collected, and expenses are
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reported in the period in which they are
incurred, regardless of when they are paid.
Agency: the Agency of Human Services.
AICPA: American Institute of Certified
Public Accountants.
Allowable Costs or Expenses: costs or
expenses that are recognized as reasonable
and related to resident care in accordance
with these rules.
Base Year: a calendar year for which the
allowable costs are the basis for the case-mix
prospective per diem rate.
Case-Mix Weight: a relative evaluation of
the nursing resources used in the care of a
given class of residents.
Centers for Medicare and Medicaid
Services(CMS) (formerly called the Health
Care Financing Administration (HCFA)):
Agency within the U.S. Department of
Health and Human Services (HHS)
responsible for developing and implementing
policies governing the Medicare and
Medicaid programs.
Certificate of Need (CON): certificate of
approval for a new institutional health
service, issued pursuant to 18 V.S.A. §2403.
Certified Rate: the rate certified by the
Division of Rate Setting to the Department of
Vermont Health Access.
Common Control: where an individual or
organization has the power to influence or
direct the actions or policies of both a
provider and an organization or institution
serving the provider, or to influence or direct
the transactions between a provider and an
organization serving the provider. The term
includes direct or indirect control, whether or
not it is legally enforceable.
Common Ownership: where an individual
or organization owns or has equity in both a
facility and an institution or organization
providing services to the facility.
Companion Aide: a Licensed Nurse Aide
(LNA) with specialized training in person-
centered dementia care.
Cost Finding: the process of segregating
direct costs by cost centers and allocating
indirect costs to determine the cost of
services provided.
Cost Report: a report prepared by a provider
on forms prescribed by the Division.
Direct Costs: costs which are directly
identifiable with a specific activity, service or
product of the program.
Director: the Director of Rate Setting.
Division: the Division of Rate Setting,
Agency of Human Services.
Donated Asset: an asset acquired without
making any payment in the form of cash,
property or services.
Facility or nursing facility: a nursing home
facility licensed and certified for
participation in the Medicaid Program by the
State of Vermont.
Fair Market Value: the price an asset would
bring by bona fide bargaining between well-
informed buyers and sellers at the date of
acquisition.
FASB: Financial Accounting Standards
Board.
Final Order of the Division: an action of
the Division which is not subject to change
by the Division, for which no review or
appeal is available from the Division, or for
which the review or appeal period has
passed.
Free standing facility: a facility that is not
hospital-affiliated.
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Funded Depreciation: funds that are
restricted by a facility’s governing body for
purposes of acquiring assets to be used in
rendering resident care or servicing long term
debt.
Fringe Benefits: shall include payroll taxes,
workers’ compensation, pension, group
health, dental and life insurances, profit
sharing, cafeteria plans and flexible spending
plans, child care for employees, employee
parties, and gifts shared by all staff. Fringe
benefits may include tuition for college credit
in a discipline related to the individual staff
member’s employment or costs of obtaining
a GED.
Generally Accepted Accounting Principles
(GAAP): those accounting principles with
substantial authoritative support. In order of
authority the following documents are
considered GAAP: (1) FASB Standards and
Interpretations, (2) APB Opinions and
Interpretations, (3) CAP Accounting
Research Bulletins, (4) AICPA Statements of
Position, (5) AICPA Industry Accounting
and Auditing Guides, (6) FASB Technical
Bulletins, (7) FASB Concepts Statements, (8)
AICPA Issues Papers and Practice Bulletins,
and other pronouncements of the AICPA or
FASB.
Generally Accepted Auditing Standards
(GAAS): the auditing standards that are most
widely recognized in the public accounting
profession.
Health Care Cost Service: publication, by
Global Insight, Inc., of national forecasts of
hospital, nursing home (NHMB), and home
health agency market baskets and regional
forecasts of CPI (All Urban) for food and
commercial power and CPIU-All Items.
Hold Day: a day for which the provider is
paid to hold a bed open is counted as a
resident day.
Hospital-affiliated facility: a facility that is
a distinct part of a hospital provider, located
either at the hospital site or within a
reasonable proximity to the hospital.
Incremental Cost: the added cost incurred
in alternative choices.
Independent Public Accountant: a
Certified Public Accountant or Registered
Public Accountant not employed by the
provider.
Indirect Costs: costs which cannot be
directly identified with a particular activity,
service or product of the program. Indirect
costs are apportioned among the program’s
services using a rational statistical basis.
Inflation Factor: a factor that takes into
account the actual or projected rate of
inflation or deflation as expressed in
indicators such as the New England
Consumer Price Index.
Interim Rate: a prospective Case-Mix rate
paid to nursing facilities on a temporary
basis.
Look-back: a review of a facility’s actual
costs for a previous period prescribed by the
Division.
Medicaid Resident: a nursing home resident
for whom the primary payor for room and
board is the Medicaid program.
New England Consumer Price Index
(NECPI-U): the New England consumer
price index for all urban consumers as
published by the Health Care Cost Service.
New Health Care Project: A project
requiring a certificate of need (CON)
pursuant to 18 V.S.A.§9434(a) or projects
which would require a CON except that their
costs are lower than those required for CON
jurisdiction pursuant 18 V.S.A.§ 9434(a).
OBRA 1987: the Omnibus Budget
Reconciliation Act of 1987.
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Occupancy Level: the number of paid days,
including hold days, as a percentage of the
licensed bed capacity.
Paid feeding/dining assistants: persons
(other than the facility’s administrator,
registered nurses, licensed practical nurses,
certified or licensed nurse aides) who are
qualified under state law pursuant to 42
C.F.R. §§483.35(h)(2), 483.160 and 488.301
and who are paid to assist in the feeding of
residents.
Per Diem Cost: the cost for one day of
resident care.
Prescription Drugs: drugs for which a
physician’s prescription is required by state
or federal law.
Person-Centered Dementia Care: care that
includes the following elements: an
individualized approach to care planning that
uses the perspective of the person with
dementia as the primary frame of reference;
values the personhood of the individual with
dementia; and provides a social environment
that supports psychological needs.
Prospective Case-Mix Reimbursement
System: a method of paying health care
providers rates that are established in
advance. These rates take into account the
fact that some residents are more costly to
care for than others.
Provider Reimbursement Manual, CMS-
15: a manual published by the U.S.
Department of Health and Human Services,
Centers for Medicare and Medicaid Services,
used by the Medicare Program to determine
allowable costs.
Rate year: the State’s fiscal year ending
June 30.
Related organization or related party: an
individual or entity that is directly or
indirectly under common ownership or
control or is related by family or other
business association with the provider.
Related organizations include but are not
restricted to entities in which an individual
who directly or indirectly receives or expects
to receive compensation in any form is also
an owner, partner, officer, director, key
employee, or lender, with respect to the
provider, or is related by family to such
persons.
Resident Assessment Form: Vermont
version of a federal form, which captures
data on a resident’s condition and which is
used to predict the resource use level needed
to care for the resident.
Resident Day: any day of services for which
the facility is paid. For example, a paid hold
day is counted as a resident day.
Restricted Funds and Revenue: funds and
investment income earned from funds
restricted for specific purposes by donors,
excluding funds restricted or designated by
an organization’s governing body.
RUG IV: A systematic classification of
residents in nursing facilities based upon a
broad study of nursing care time required by
groups of residents exhibiting similar needs.
Secretary: the Secretary of the Agency of
Human Services.
Special hospital-based nursing facility: a
facility that meets the following criteria: (a)
is physically integrated as part of a hospital
building with at least one common wall and a
direct internal access between the hospital
and the nursing home; (b) is part of a single
corporation that governs both the hospital
and the nursing facility; and (c) files one
Medicare cost report for both the hospital and
the nursing home.
Standardized Resident Days: Base Year
resident days multiplied by the facility’s
average Case-Mix score for the base year.
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State nursing facilities: facilities owned
and/or operated by the State of Vermont.
Swing-Bed: a hospital bed used to provide
nursing facility services.
17 TRANSITIONAL PROVISIONS
Notwithstanding any other provisions of these
rules, the amendments to these rules effective
March 6, 2015 shall be applied to payments for
services rendered on or after March 1, 2015.
17.1 Companion Aide Pilot Project
The Companion Aide Pilot Project will
provide a per diem rate adjustment to
selected facilities to develop additional
knowledge and experience in the area of
person-centered dementia care through the
use of Companion Aides. Companion Aides
will be Licensed Nurse Aides with
specialized training in person-centered
dementia care to provide an individualized
approach that uses the perspective of the
person with dementia as the primary frame of
reference.
The work of the Companion Aides funded by
this pilot program must comply with the job
description detailed in the Companion Aide
application. The selected nursing facilities
may have the Companion Aide work any
shift.
The pilot project will be for 2.5 years
beginning January 1, 2015 and ending on
June 30, 2017.
(a) Selection Process
(1) All Vermont nursing facilities
participating in the Medicaid program are
eligible to apply.
(2) Five facilities will be selected from the
pool of completed applications by the
Commissioner of the Department of
Disabilities Aging and Independent Living.
One facility will be selected from each of
five geographical areas of the State based
on the county groupings in the Council on
Aging service areas. These geographical
areas will be Northwest Vermont (Addison,
Chittenden, Franklin and Grand Isle
counties); Northeast Vermont (Caledonia,
Essex, and Orleans counties); Central
Vermont (Lamoille, Orange, and
Washington counties); Southwest Vermont
(Rutland and Bennington counties); and
Southeast Vermont (Windham and Windsor
counties).
(3) Within each geographical area, the
applicants will be ranked by the proportion
of their residents with a diagnosis of
Alzheimer’s or dementia compared to the
number of total residents, and the facility
with the highest proportion will be selected.
This data will be reported on the
Companion Aide application and must be
from the Minimum Data Set (MDS)
information used for the June 15, 2014
picture date in the second quarter of 2014.
(4) If no nursing facility applies from a
given region, an additional nursing facility
from the geographical area with the highest
number of applicants will be selected. If
there are two regions with no applicants, an
additional facility then will be selected
from the geographical area with the second
highest number of applicants.
(5) If there is a tie in the selection process,
the facility with the highest percentage of
Medicaid residents to total residents for
State fiscal year 2014, based on census
information reported to the Division of Rate
Setting, will be selected.
(b) Rate Adjustment Calculations and
Procedures
(1) The rate adjustment will include the
salary and fringe benefit costs for the
approved number of Companion Aides at
the selected facilities. The hourly salaries
and fringe benefit rates will be reported on
MEDICAID PAYMENT RATES FOR LONG-TERM CARE FACILITIES
AGENCY OF HUMAN SERVICES -45- DIVISION OF RATE SETTING
the Companion Aide application and
reviewed by the Division of Rate Setting.
(2) The selected facilities will be funded at
a ratio of five Companion Aides per 100
filled beds. The calculated number shall be
rounded up or down to determine the
number of Companion Aide Full Time
Equivalents (2,080 hours/year). The
resulting number of aides to be funded will
vary with the number of filled beds at the
selected facilities.
(3) The number of total beds filled shall
equal the total number of residents reported
on the June 15, 2014 MDS picture date (Q2
2014) summary report supplied to the
Division of Licensing and Protection.
(c) Inflation of Rate Adjustments
The original per diem adjustment for
Companion Aides will be inflated on July
1, 2015 and July 1, 2016 using the same
methodology as detailed in Subsection 5.8
of these rules.
(d) End of Adjustment and Special Nursing
Rebase Provisions
(1) The adjustments in this Section will be
terminated as of July 1, 2017 when Nursing
Care costs are rebased to base year 2015.
This will be the first year when the costs of
the Companion Aides will be in the
facility’s base year costs.
(2) For facilities with years ending earlier
than December 31, the Division will
annualize the cost of the Companion Aides
so that a full year of these costs will be
included in the selected facilities’ 2015
base year costs.
(3) The Companion Aide costs at the five
selected facilities will be exempt from the
cap on nursing costs in the July 1, 2017
rebase. In rebases after that time, the extant
cap on Nursing Care Costs will apply.
(e) Ongoing Reporting Requirements
The selected facilities shall complete an
annual Companion Aide Pilot Project
Outcome Report. This report will be sent
to the providers with the Companion Aide
application so nursing facility staff will
understand the data reporting requirement
when they apply for the pilot. These
reports will be due by November 10, 2015
and November 10, 2016. The Division may
end the Companion Aide rate adjustment
for a facility that does not comply with the
ongoing reporting requirements.